SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /_/
Pre-Effective Amendment No. __ /_/
Post-Effective Amendment No. 47 /X/
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /_/
Amendment No. 47 /X/
THE DREYFUS/LAUREL FUNDS, INC.
(Exact Name of Registrant as Specified in Charter)
200 Park Avenue - 55th floor
New York, New York 10166
(Address of Principal Executive Office) (ZIP Code)
Registrant's Telephone Number, including Area Code: (800) 225-5267
John E. Pelletier
Secretary
The Dreyfus/Laurel Funds, Inc.
200 Park Avenue - 55th floor
New York, New York 10166
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering: As soon as possible after
this post-effective amendment becomes effective.
It is proposed that this filing will become effective (check appropriate
box):
/_/ immediately upon filing pursuant to paragraph (b)
/x/ on July 1, 1996 pursuant to paragraph (b)
/_/ 60 days after filing pursuant to paragraph (a)(1)
/_/ on (date) pursuant to paragraph (a)(1)
/_/ 75 days after filing pursuant to paragraph (a)(2)
/_/ on (date) pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
/_/ this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
The Registrant has registered an indefinite amount of securities under
the Securities Act of 1933 pursuant to Section 24(f) under the Investment
Company Act of 1940; accordingly, no fee is payable herewith. A Rule 24f-2
Notice for the Registrant's most recent fiscal year ended October 31, 1995
was filed with the Commission on December 28, 1995.
The Dreyfus/Laurel Funds, Inc.
Cross-Reference Sheet Pursuant to Rule 495(a)
Items in
Part A of
Form N-1A Caption Prospectus Caption
1. Cover Page Cover Page
2. Synopsis Expense Summary
3. Condensed Financial Financial Highlights
Information
4. General Description of Description of the Fund--Investment
Registrant Objective, Management Policies,
Investment Techniques, Certain
Portfolio Securities; General
Information
5. Management of the Fund Management of the Fund
6. Capital Stock and Other Description of the Fund--General;
Securities Dividends, Other Distributions and
Taxes; Shareholder Services--
Dreyfus Dividend Options; General
Information
7. Purchase of Securities Expense Summary; Management of the
Being Offered Fund; How to Buy Fund Shares;
Distribution Plan (Investor Shares
Only); Shareholder Services
8. Redemption or How to Redeem Fund Shares;
Repurchase Shareholder Services--Automatic
Withdrawal Plan
9. Pending Legal Not Applicable
Proceedings
The Dreyfus/Laurel Funds, Inc.
Cross-Reference Sheet Pursuant to Rule 495(a)
Items in
Part B of Statement of Additional
Form N-1A Caption Information Caption
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information Cover Page
History
13. Investment Objectives Investment Objective and Management
and Policies Policies--Portfolio Securities,
Management Policies, Investment
Restrictions
14. Management of the Fund Directors and Officers
15. Control Persons and Controlling Shareholder;
Principal Holders of Directors and Officers
Securities
16. Investment Advisory Management Arrangements;
and Other Services Distribution Plan; Custodian,
Transfer and Dividend Disbursing
Agent, Counsel and Independent
Auditors
17. Brokerage Allocation Portfolio Transactions
and Other Practices
18. Capital Stock and Other Cover Page; Information About the
Securities Fund; (See Prospectus Captions:
Description of the Fund--General;
General Information)
19. Purchase, Redemption Purchase of Fund Shares; Redemption
and Pricing of of Fund Shares; Shareholder
Securities Being Services; Determination of Net
Offered Asset Value
20. Tax Status Dividends, Other Distributions and
Taxes
21. Underwriters (See Prospectus Caption: Management
of the Fund)
22. Calculation of Performance Information
Performance Data
23. Financial Statements Not Applicable
The Dreyfus/Laurel Funds, Inc.
Contents of Post-Effective Amendment
This Post-Effective Amendment to the Registration Statement on Form N-1A
for The Dreyfus/Laurel Funds, Inc. (the "Registrant") contains the
following documents:
Facing Sheet
Cross-Reference Sheet
Part A - Prospectus
Dreyfus Disciplined Intermediate Bond Fund
Part B - Statement of Additional Information
Dreyfus Disciplined Intermediate Bond Fund
Part C - Other Information
Dreyfus Disciplined Intermediate Bond Fund
Signatures
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PROSPECTUS JULY 1, 1996
DREYFUS DISCIPLINED INTERMEDIATE BOND FUND
- ---------------------------------------------------------------------------
DREYFUS DISCIPLINED INTERMEDIATE BOND FUND (THE "FUND") IS A
SEPARATE, DIVERSIFIED PORTFOLIO OF THE DREYFUS/LAUREL FUNDS, INC., AN
OPEN-END MANAGEMENT INVESTMENT COMPANY (THE "COMPANY"), KNOWN AS A MUTUAL
FUND. THE FUND SEEKS TO OUTPERFORM THE LEHMAN BROTHERS AGGREGATE BOND INDEX,
WHILE MAINTAINING A SIMILAR LEVEL OF RISK, BY INVESTING PRIMARILY IN DOMESTIC
AND FOREIGN INVESTMENT-GRADE DEBT SECURITIES AND BY ACTIVELY MANAGING BOND
MARKET AND MATURITY EXPOSURE. UNDER NORMAL MARKET CONDITIONS, THE FUND EXPECTS
TO MAINTAIN A DOLLAR-WEIGHTED AVERAGE MATURITY OF BETWEEN THREE AND TEN
YEARS.
BY THIS PROSPECTUS, THE FUND IS OFFERING INVESTOR SHARES AND CLASS R
SHARES. INVESTOR SHARES AND CLASS R SHARES ARE IDENTICAL, EXCEPT AS TO THE
SERVICES OFFERED TO AND THE EXPENSES BORNE BY EACH CLASS. CLASS R SHARES ARE
SOLD PRIMARILY TO BANK TRUST DEPARTMENTS AND OTHER FINANCIAL SERVICE
PROVIDERS (INCLUDING MELLON BANK, N.A. ("MELLON BANK") AND ITS AFFILIATES)
("BANKS") ACTING ON BEHALF OF CUSTOMERS HAVING A QUALIFIED TRUST OR
INVESTMENT ACCOUNT OR RELATIONSHIP AT SUCH INSTITUTION, OR TO CUSTOMERS WHO
HAVE RECEIVED AND HOLD SHARES OF THE FUND DISTRIBUTED TO THEM BY VIRTUE OF
SUCH AN ACCOUNT OR RELATIONSHIP. INVESTOR SHARES ARE SOLD PRIMARILY TO RETAIL
INVESTORS BY THE FUND'S DISTRIBUTOR AND BY BANKS, SECURITIES BROKERS OR
DEALERS ("SELECTED DEALERS") AND OTHER FINANCIAL INSTITUTIONS (COLLECTIVELY,
"AGENTS") THAT HAVE ENTERED INTO A SELLING AGREEMENT WITH THE FUND'S
DISTRIBUTOR.
SHARES OF THE FUND ARE SOLD WITHOUT A SALES LOAD. INVESTOR SHARES OF
THE FUND ARE SUBJECT TO DISTRIBUTION AND SHAREHOLDER SERVICING FEES.
YOU CAN PURCHASE OR REDEEM FUND SHARES BY TELEPHONE USING THE DREYFUS
TELETRANSFER PRIVILEGE.
THE DREYFUS CORPORATION SERVES AS THE FUND'S INVESTMENT MANAGER. THE
DREYFUS CORPORATION IS REFERRED TO AS "DREYFUS."
THIS PROSPECTUS SETS FORTH CONCISELY INFORMATION ABOUT THE FUND THAT
YOU SHOULD KNOW BEFORE INVESTING. IT SHOULD BE READ CAREFULLY BEFORE YOU
INVEST AND RETAINED FOR FUTURE REFERENCE.
THE STATEMENT OF ADDITIONAL INFORMATION DATED JULY 1, 1996 ("SAI"),
WHICH MAY BE REVISED FROM TIME TO TIME, PROVIDES A FURTHER DISCUSSION OF
CERTAIN AREAS IN THIS PROSPECTUS AND OTHER MATTERS THAT MAY BE OF INTEREST TO
SOME INVESTORS. IT HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
("SEC") AND IS INCORPORATED HEREIN BY REFERENCE. FOR A FREE COPY, WRITE TO
THE FUND AT 144 GLENN CURTISS BOULEVARD, UNIONDALE, NEW YORK 11556-0144 OR
CALL 1-800-645-6561. WHEN TELEPHONING, ASK FOR OPERATOR 144.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
OR ENDORSED BY, ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY.
THE NET ASSET VALUE OF FUNDS OF THIS TYPE WILL FLUCTUATE FROM TIME TO TIME.
THE FEES TO WHICH THE FUND IS SUBJECT ARE SUMMARIZED IN THE "EXPENSE
SUMMARY" SECTION OF THE FUND'S PROSPECTUS. THE FUND PAYS AN AFFILIATE OF
MELLON BANK TO BE ITS INVESTMENT MANAGER. MELLON BANK OR AN AFFILIATE MAY BE
PAID FOR PERFORMING OTHER SERVICES FOR THE FUND, SUCH AS CUSTODIAN, TRANSFER
AGENT OR FUND ACCOUNTANT SERVICES. THE FUND IS DISTRIBUTED BY PREMIER MUTUAL
FUND SERVICES, INC.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
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TABLE OF CONTENTS
PAGE
EXPENSE SUMMARY........................................... 4
FINANCIAL HIGHLIGHTS...................................... 5
DESCRIPTION OF THE FUND................................... 7
MANAGEMENT OF THE FUND.................................... 15
HOW TO BUY FUND SHARES.................................... 16
SHAREHOLDER SERVICES...................................... 19
HOW TO REDEEM FUND SHARES................................. 22
DISTRIBUTION PLAN (INVESTOR SHARES ONLY).................. 25
DIVIDENDS, OTHER DISTRIBUTIONS AND TAXES.................. 26
PERFORMANCE INFORMATION................................... 27
GENERAL INFORMATION....................................... 28
Page 2
[This Page Intentionally Left Blank]
Page 3
<TABLE>
<CAPTION>
EXPENSE SUMMARY
INVESTOR CLASS R
SHARES SHARES
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Load Imposed on Purchases............................... none none
Maximum Sales Load Imposed on Reinvestments........................... none none
Deferred Sales Load................................................... none none
Redemption Fee........................................................ none none
Exchange Fee.......................................................... none none
ESTIMATED ANNUAL FUND OPERATING EXPENSES:
(AS A PERCENTAGE OF NET ASSETS)
Management Fee........................................................ 0.55% 0.55%
12b-1 Fee(1).......................................................... 0.25% none
Other Expenses........................................................ 0.00% 0.00%
---- ----
Total Fund Operating Expenses......................................... 0.80% 0.55%
EXAMPLE:
An investor would pay the following expenses
on a $1,000 investment, assuming (1) a 5% annual
return and (2) redemption at the end of each
time period:
INVESTOR CLASS R
SHARES SHARES
1 YEAR $8 $6
3 YEARS $26 $18
- --------------
(1) See "Distribution Plan (Investor Shares Only)" for a description of the
Fund's Distribution Plan for the Investor shares.
</TABLE>
- ---------------------------------------------------------------------------
THE AMOUNTS LISTED IN THE EXAMPLE SHOULD NOT BE CONSIDERED AS
REPRESENTATIVE OF FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR LESS
THAN THOSE INDICATED. MOREOVER, WHILE THE EXAMPLE ASSUMES A 5% ANNUAL RETURN,
THE FUND'S ACTUAL PERFORMANCE WILL VARY AND MAY RESULT IN AN ACTUAL RETURN
GREATER OR LESS THAN 5%.
- ---------------------------------------------------------------------------
The purpose of the foregoing table is to assist you in understanding
the various costs and expenses that investors will bear, directly or
indirectly, the payment of which will reduce investors' return on an annual
basis. Long-term investors in Investor shares could pay more in 12b-1 fees
than the economic equivalent of paying the maximum front-end sales charges
applicable to mutual funds sold by members of the National Association of
Securities Dealers, Inc. The information in the foregoing table does not
reflect any fee waivers or expense reimbursement arrangements that may be in
effect. Certain Agents may charge their clients direct fees for effecting
transactions in Fund shares; such fees are not reflected in the foregoing
table. See "Management of the Fund," "How to Buy Fund Shares" and
"Distribution Plan (Investor Shares Only)."
The Company understands that Agents may charge fees to their clients
who are owners of the Fund's Investor shares for various services provided in
connection with a client's account. These fees would be in addition to any
amounts received by an Agent under its Selling Agreement ("Agreement") with
Premier Mutual Fund Services, Inc. (the "Distributor"). The Agreement
requires each Agent to disclose to its clients any compensation payable to
such Agent by the Distributor and any other compensation payable by the
clients for various services provided in connection with their accounts.
Page 4
FINANCIAL HIGHLIGHTS (UNAUDITED)
The tables below set forth certain information covering the Fund's
investment results for a single Investor share or Class R share outstanding
for the period indicated. Further financial data and related notes are
included in the Fund's Semi-Annual Report for the period ended April 30,
1996, which is incorporated into the SAI and available upon request. This
information has been derived from information provided in the Fund's
financial statements.
<TABLE>
<CAPTION>
INVESTOR SHARES
----------------------------
PERIOD ENDED APRIL 30, 1996(1)
-----------------------------
<S> <C>
PERSHARE DATA:
Net asset value, beginning of period................................ $12.50
--------
INVESTMENT OPERATIONS:
Investment income--net.............................................. (0.34)
Net realized and unrealized (loss) on investments................... (0.41)
--------
TOTAL FROM INVESTMENT OPERATIONS.................................... (0.07)
--------
DISTRIBUTIONS;
Dividends from investment income--net............................... 0.34
--------
Net asset value, end of period...................................... $12.09
========
TOTAL INVESTMENT RETURN(2)............................................ (1.26%)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets(2).......................... 0.80%
Ratio of net investment income to average net assets(2)............. 5.45%
Portfolio Turnover Rate(3).......................................... 109.10%
Net Assets, end of period (000's Omitted)........................... $1,712
(1) The Fund commenced selling Investor shares on November 1, 1995.
(2) Annualized.
(3) Not annualized.
Page 5
FINANCIAL HIGHLIGHTS (UNAUDITED) (CONTINUED)
CLASS R SHARES
----------------------------
PERIOD ENDED APRIL 30, 1996(1)
-----------------------------
PERSHARE DATA:
Net asset value, beginning of period................................ $12.50
--------
INVESTMENT OPERATIONS:
Investment income--net.............................................. 0.35
Net realized and unrealized (loss) on investments................... (0.41)
--------
TOTAL FROM INVESTMENT OPERATIONS.................................... (0.06)
--------
DISTRIBUTIONS;
Dividends from investment income--net............................... (0.35)
--------
Net asset value, end of period...................................... $12.09
=======
TOTAL INVESTMENT RETURN(1)............................................ (1.02%)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets(2).......................... 0.55%
Ratio of net investment income to average net assets(2)............. 5.88%
Portfolio Turnover Rate(3).......................................... 109.10%
Net Assets, end of period (000's Omitted)........................... $34,890
(1) The Fund commenced selling Class R shares on November 1, 1995.
(2) Annualized.
(3) Not annualized.
</TABLE>
Page 6
DESCRIPTION OF THE FUND
GENERAL
By this Prospectus, the Fund is offering Investor shares and Class R
shares. Investor shares and Class R shares are identical, except as to the
services offered to and the expenses borne by each Class. Class R shares are
sold primarily to Banks acting on behalf of customers having a qualified
trust or investment account or relationship at such institution, or to
customers who have received and hold shares of the Fund distributed to them
by virtue of such an account or relationship. Investor shares are sold
primarily to retail investors by the Fund's Distributor and by Agents that
have entered into an Agreement with the Fund's Distributor. If shares of the
Fund are held in an account at a Bank or with an Agent, such Bank or Agent
may require you to place all Fund purchase, exchange and redemption orders
through them. All Banks and Agents have agreed to transmit transaction
requests to the Fund's transfer agent or to the Fund's Distributor.
Distribution and shareholder servicing fees paid by Investor shares will
cause Investor shares to have a higher expense ratio and to pay lower
dividends than Class R shares.
INVESTMENT OBJECTIVE
The Fund seeks to outperform the Lehman Brothers Aggregate Bond Index
(the "Benchmark"), while maintaining a similar level of risk, by investing
primarily in domestic and foreign investment-grade debt securities and by
actively managing bond market and maturity exposure. There can be no
assurance that the Fund will achieve its investment objective. Under normal
market conditions, the Fund expects to maintain a dollar-weighted average
maturity of between three and ten years. The Fund is not (nor will it be
operated as) an index fund, and the Fund's portfolio investments will not be
limited to debt issues included in the Benchmark.
MANAGEMENT POLICIES
Dreyfus seeks to achieve the Fund's investment objective by actively
managing the Fund's portfolio. Dreyfus' techniques include security selection
and management of bond market and maturity exposure. Dreyfus selects the
Fund's portfolio investments on the basis of, among other factors, yields,
credit quality, the level of interest rates and inflation, general economic
and financial trends, and its outlook for the securities markets. Although
the Fund may maintain aggregate investment characteristics similar to the
Benchmark, the Fund seeks to invest in individual debt securities that
together will provide a higher total return than the Benchmark. Dreyfus'
investment techniques utilize a disciplined control of fund risk and a
process of rigorous control and testing. Prior to security selection,
quality, duration, coupon, maturity and sector are targeted within
pre-determined ranges as a percentage of the total portfolio. The selection
must fit within strategies that are constantly being developed to meet the
targeted positions. The security selection process is completed only after
computer modeling is employed to stress and scenario test the strategies
through "what if" portfolios for a variety of possible changes in market
conditions. Dreyfus will use various investment techniques to attempt to
protect against risks (such as adverse interest rate fluctuations or bond
market movements) and to manage the effective maturity of the Fund's
portfolio securities. However, if Dreyfus judges market conditions
incorrectly or employs a management strategy that does not correlate well
with the Fund's investments, these techniques could result in a loss,
regardless of whether Dreyfus intended to increase the Fund's total return or
to reduce risk.
Under normal market conditions, the Fund will invest at least 65% of
its total assets in debt securities, such as bonds, notes and debentures, of
domestic and foreign issuers. See "Certain Portfolio Securities" below. The
issuers of these debt securities include the U.S. Government and foreign
governments, their political subdivisions, agencies and municipalities, and
domestic and foreign corporations. The Fund currently intends to limit its
investments in debt securities to those rated at least investment-grade.
Investment-grade debt securities are securities that, at the time of
purchase, are rated within one of the four highest grades assigned by Moody's
Investors Service, Inc. ("Moody's") (Aaa, Aa, A or Baa) or Standard & Poor's
("S&P") (AAA, AA, A or BBB) or, if unrated, are determined by Dreyfus to be
of comparable quality. At
Page 7
least 55% of the value of the Fund's net assets will normally consist of debt
securities that, at the time of purchase, are rated at least Aa or AA or, if
unrated, are determined by Dreyfus to be of comparable quality.
Debt securities rated Baa by Moody's or BBB by S&P are considered by
those rating agencies to be "investment grade" securities, although Moody's
considers securities rated Baa to have speculative characteristics.
Furthermore, although bonds rated BBB by S&P exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and principal on debt
in this category than on debt in higher rated categories. The Fund will, in a
prudent and orderly fashion, sell securities whose ratings drop below
investment-grade (or comparable) quality. A discussion of the Moody's and S&P
rating categories appears in the SAI.
The debt securities in which the Fund may invest include: (1) U.S.
Treasury bills, notes and bonds; (2) other obligations issued or guaranteed
as to interest and principal by the U.S. Government, its agencies and
instrumentalities; (3) mortgage-related securities backed by the U.S.
Government, its agencies and instrumentalities, or by private issuers; (4)
taxable obligations issued by or on behalf of states, territories and
possessions of the United States and the District of Columbia and their
political subdivisions, agencies and instrumentalities, or multi-state
agencies or authorities; (5) corporate debt securities; and (6) Eurodollar
bonds and notes. The Fund may invest up to 20% of its total assets in debt
securities issued by foreign governments and foreign corporations.
The Fund generally invests in debt securities with intermediate-term
maturities, which securities are expected to pay higher yields and experience
greater fluctuations in value than securities with short-term maturities.
Under normal market conditions, the Fund expects to maintain a
dollar-weighted average maturity of between three and ten years. Within this
limitation, the Fund may purchase individual debt securities with effective
maturities of less than three years and greater than ten years. Under normal
market conditions, the longer the average maturity of the Fund's holdings,
the greater the expected yield and price volatility.
The Fund may also invest in convertible debt obligations, convertible
and non-convertible preferred stocks, zero coupon bonds and repurchase
agreements and, to maintain liquidity, or to establish temporary liquidity
positions necessary to effect pending investments, may invest in commercial
paper and in obligations of U.S. and foreign banks, including certificates of
deposit, bankers' acceptances, time deposits, Eurodollar Certificates of
Deposit ("ECDs"), Yankee Certificates of Deposit ("Yankee CDs"), and
Eurodollar Time Deposits ("ETDs"). The Fund will not invest in common stocks
and will sell any common stocks received upon the conversion of convertible
securities as promptly as it can and in a manner that it believes will reduce
its risk of loss in connection with the sale.
The debt securities in which the Fund may invest have fixed, floating
or variable rates of interest, and some debt securities, such as zero coupon
bonds, do not pay current interest, but are purchased at a discount from
their face values. The Fund may purchase any of the securities in which it
may invest on a when-issued or delayed delivery basis. The Fund may also
engage in options and futures transactions.
Although Dreyfus normally invests the Fund's assets according to the
Fund's investment strategy, when Dreyfus determines that adverse market
conditions exist, the Fund may adopt a defensive position and invest
temporarily and without limitation in money market and other short-term debt
instruments. To the extent that the Fund so invests, it may not achieve its
investment objective.
The Benchmark is a broad market weighted index composed of the Lehman
Brothers Government/Corporate Bond Index and the Lehman Brothers
Mortgage-Backed Securities Index and includes fixed-income, investment-grade
U.S. Treasury and agency issues, corporate bond issues, and mortgage-backed
securities. All issues have at least one year to maturity.
INVESTMENT TECHNIQUES
In connection with its investment objective and policies, the Fund
may engage in the following investment techniques, among others, to attempt
to hedge various market risks or to enhance total return:
Page 8
BORROWING MONEY. The Fund is authorized, within specified limits, to
borrow money for temporary administrative purposes and to pledge its assets
in connection with such borrowings.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. To secure advantageous
prices or yields, the Fund may purchase debt securities on a when-issued
basis or may purchase or sell securities for delayed delivery. In such
transactions, delivery of the securities occurs beyond the normal settlement
periods, but no payment or delivery is made by the Fund prior to the actual
delivery or payment by the other party to the transaction. The purchase of
securities on a when-issued or delayed delivery basis involves the risk that,
as a result of an increase in yields available in the marketplace, the value
of the securities purchased will decline prior to the settlement date. The
sale of securities for delayed delivery involves the risk that the prices
available in the market on the delivery date may be greater than those
obtained in the sale transaction. The Fund will establish a segregated
account consisting of cash, U.S. Government Securities or other high-grade
debt securities in an amount at least equal at all times to the amount of its
when-issued and delayed delivery commitments.
FUTURES, OPTIONS AND OTHER DERIVATIVE INSTRUMENTS. The Fund may
purchase and sell various financial instruments ("Derivative Instruments"),
such as financial futures contracts (including interest rate, index and
foreign currency futures contracts), options (including options on
securities, indices, foreign currencies and futures contracts), forward
currency contracts and interest rate and currency swaps, caps, collars and
floors. The index Derivative Instruments the Fund may use may be based on
indices of U.S. or foreign equity or debt securities. These Derivative
Instruments may be used, for example, to preserve a return or spread, to lock
in unrealized market value gains or losses, to facilitate or substitute for
the sale or purchase of securities, to manage the duration of securities, to
alter the exposure of a particular investment or portion of the Fund's
portfolio to fluctuations in interest rates or currency rates, to uncap a
capped security or to convert a fixed rate security into a variable rate
security or a variable rate security into a fixed rate security.
The Fund's ability to use Derivative Instruments may be limited by
market conditions, regulatory limits and tax considerations. The Fund might
not use any of these strategies and there can be no assurance that any
strategy that is used will succeed. The Fund may not purchase put or call
options that are traded on a national stock exchange in an amount exceeding
5% of its net assets. See the SAI for more information regarding Derivative
Instruments and the risks relating thereto.
FOREIGN CURRENCY TRANSACTIONS. The Fund may engage in currency
exchange transactions on a spot or forward basis and may hold foreign
currency deposits. (See "ECDs, ETDs and Yankee CDs".) The Fund may exchange
foreign currency on a spot basis at the spot rate then prevailing for purchasi
ng or selling foreign currencies in the foreign exchange market.
The Fund may also enter into forward currency contracts for the
purchase or sale of a specified currency at a specified future date with
respect to either specific transactions or portfolio positions in order to
minimize the risk to the Fund from adverse changes in the relationship
between the U.S. dollar and foreign currencies. For example, when the Fund
anticipates purchasing or selling a security denominated in a foreign
currency, the Fund may enter into a forward contract in order to set the
exchange rate at which the transaction will be made. The Fund may also enter
into a forward contract to sell an amount of foreign currency approximating
the value of some or all of the Fund's securities positions denominated in
that currency. The Fund will not enter into or maintain a position in forward
contracts if their consummation would obligate the Fund to deliver an amount
of foreign currency greater than the value of the Fund's assets denominated
or quoted in, or currency convertible into, such currency.
Forward currency contracts may substantially change the Fund's
investment exposure to changes in currency exchange rates and could result in
losses if currencies do not perform as Dreyfus anticipates. There is no
assurance that Dreyfus' use of forward currency contracts will be
advantageous to the Fund or that it will hedge at an appropriate time.
Page 9
RISKS OF DERIVATIVE INSTRUMENTS. The use of Derivative Instruments
involves special risks, including: (1) possible imperfect or no correlation
between price movements of the portfolio investments (held or intended to be
purchased) involved in the transaction and price movements of the Derivative
Instruments involved in the transaction; (2) possible lack of a liquid
secondary market for any particular Derivative Instrument at a particular
time; (3) the need for additional portfolio management skills and techniques;
(4) losses due to unanticipated market price movements; (5) the fact that,
while such strategies can reduce the risk of loss, they can also reduce the
opportunity for gain, or even result in losses, by offsetting favorable price
movements in portfolio investments; (6) incorrect forecasts by Dreyfus
concerning interest or currency exchange rates or direction of price
fluctuations of the investment involved in the transaction, which may result
in the strategy being ineffective; (7) loss of premiums paid by the Fund on
options it purchases; and (8) the possible inability of the Fund to purchase
or sell a portfolio security at a time when it would otherwise be favorable
for it to do so, or the need to sell a portfolio security at a
disadvantageous time, due to the need for the Fund to maintain "cover" or to
segregate securities in connection with such transactions and the possible
inability of the Fund to close out or liquidate its positions.
Dreyfus may use Derivative Instruments for hedging purposes (to
adjust the risk characteristics of the Fund's portfolio)and may use these
instruments to adjust the return characteristics of the Fund's portfolio of
investments. This can increase investment risk. If Dreyfus judges market
conditions incorrectly or employs a strategy that does not correlate well
with the Fund's investments, these techniques could result in a loss,
regardless of whether the intent was to reduce risk or increase return. These
techniques may increase volatility of the Fund and may involve a small
investment of cash relative to the magnitude of the risk assumed. In
addition, these techniques could result in a loss if the counterparty to the
transaction does not perform as promised or if there is not a liquid
secondary market to close out a position that the Fund has entered into.
Options and futures transactions may increase portfolio turnover
rates, which results in correspondingly greater commission expenses and
transaction costs, and may result in certain tax consequences.
New financial products and risk management techniques continue to be
developed. The Fund may use these instruments and techniques to the extent
consistent with its investment objective and polices, and regulatory
requirements applicable to investment companies.
MORTGAGE DOLLAR ROLLS. The Fund may enter into mortgage "dollar
rolls" in which the Fund sells mortgage-related securities for delivery in
the current month and simultaneously contracts to purchase substantially
similar securities on a specified future date. The mortgage-related
securities that are purchased will be of the same type and will have the same
interest rate as those securities sold, but generally will be supported by
different pools of mortgages with different prepayment histories than those
sold. The Fund forgoes principal and interest paid during the roll period on
the securities sold in a dollar roll, but the Fund is compensated by the
difference between the current sales price and the lower price for the future
purchase, as well as by any interest earned on the proceeds of the securities
sold. The Fund could be compensated also through the receipt of fee income
equivalent to a lower forward price. The dollar rolls entered into by the
Fund normally will be "covered." A covered roll is a specific type of dollar
roll for which there is an offsetting cash position or a cash equivalent
security position that matures on or before the forward settlement date of
the related dollar roll transaction. Covered rolls are not treated as a
borrowing or other senior security and will be excluded from the calculation
of the Fund's borrowings and other senior securities.
REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements.
A repurchase agreement involves the purchase of a security by the Fund and a
simultaneous agreement (generally with a bank or broker-dealer) to repurchase
that security from the Fund at a specified price and date or upon demand.
This technique offers a method of earning income on idle cash. A risk
associated with repurchase agreements is the failure of the seller to
repurchase the securities as agreed, which may cause the Fund to suffer
Page 10
a loss if the market value of such securities declines before they can be
liquidated on the open market. Repurchase agreements with a duration of more
than seven days are considered illiquid securities and are subject to the
associated limits discussed under "Certain Portfolio Securities _ Illiquid
Investments."
MASTER/FEEDER OPTION. The Company may in the future seek to achieve
the Fund's investment objective by investing all of the Fund's net investable
assets in another investment company having the same investment objective and
substantially the same investment policies and restrictions as those
applicable to the Fund. Shareholders of the Fund will be given at least 30
days' prior notice of any such investment. Such investment would be made only
if the Company's Board of Directors determines it to be in the best interest
of the Fund and its shareholders. In making that determination, the Company's
Board of Directors will consider, among other things, the benefits to
shareholders and/or the opportunity to reduce costs and achieve operational
efficiencies. Although the Fund believes that the Board of Directors will not
approve an arrangement that is likely to result in higher costs, no assurance
is given that costs will be materially reduced if this option is implemented.
CERTAIN PORTFOLIO SECURITIES
U.S. GOVERNMENT SECURITIES. The Fund may invest in obligations issued
or guaranteed as to both principal and interest by the U.S. Government or
backed by the full faith and credit of the United States ("U.S. Government
Securities"). In addition to direct obligations of the U.S. Treasury, these
include securities issued or guaranteed by the Federal Housing
Administration, Farmers Home Administration, Export-Import Bank of the United
States, Small Business Administration, Government National Mortgage
Association ("GNMA"), General Services Administration and Maritime
Administration. The Fund may also invest in U.S. Government obligations that
do not carry the full faith and credit guarantee, such as those issued by the
Federal National Mortgage Association ("FNMA"), the Federal Home Loan
Mortgage Corporation ("FHLMC"), or other instrumentalities.
MORTGAGE-RELATED SECURITIES. Mortgage-related securities are
securities that, directly or indirectly, represent interests in, or are
secured by and payable from, loans secured by real property, including
pass-through securities such as GNMA, FNMA and FHLMC certificates, private
pass-through securities, commercial mortgage-related securities, and certain
collateralized mortgage obligations. There are currently three basic types of
mortgage-related securities: (1) those issued or guaranteed by the U.S.
Government, its agencies or instrumentalities, such as GNMA, FNMA and FHLMC;
(2) those issued by private issuers that represent interests in, or are
collateralized by, mortgage-related securities issued or guaranteed by the
U.S. Government, its agencies or instrumentalities; and (3) those issued by
private issuers that represent interests in, or are collateralized by, whole
loan mortgages or mortgage-related securities without a government guarantee,
but usually with some other form of credit support. Investors should note
that mortgage-related securities in which the Fund may invest are developed
and marketed from time-to-time and that, consistent with its investment
limitations, the Fund may invest in those mortgage-related securities that
Dreyfus believes may assist the Fund in achieving its investment objective.
The yield characteristics of mortgage-related securities differ from
those of traditional debt securities. Among the major differences are that
interest and principal payments on mortgage-related securities are made more
frequently, generally once a month, and that principal prepayments on
mortgage-related securities may occur at any time because the underlying
mortgage loans generally may be prepaid at any time. As a result, if the Fund
purchases mortgage-related securities at a premium, a prepayment rate that is
faster than expected will reduce yield to maturity, while a prepayment rate
that is slower than expected will have the opposite effect of increasing
yield to maturity. Conversely, if the Fund purchases mortgage-related
securities at a discount, faster than expected prepayments will increase,
while slower than expected prepayments will reduce, yield to maturity. The
timing and magnitude of prepayments cannot be predicted. Generally, however,
prepayments on fixed-rate mortgage loans will increase during a period of
falling mortgage interest rates and will decrease during a period of rising
mortgage interest rates. Amounts available for reinvestment
Page 11
by the Fund are likely to be greater during a period of falling interest rates
and, as a result, are likely to be reinvested at lower interest rates than
during a period of rising interest rates. Accelerated prepayments on
mortgage-related securities purchased by the Fund at a premium also impose a
risk of loss of principal because the premium may not have been fully
amortized at the time the principal is repaid in full. The value of
mortgage-related securities may be significantly affected by changes in
interest rates, the market's perception of the issuers, and the
creditworthiness of the parties involved.
Timely payment of principal and interest on pass-through securities
of GNMA (but not of FNMA or FHLMC) is guaranteed by the full faith and credit
of the United States. This is not a guarantee against market decline of the
value of these securities or the shares of the Fund. It is possible that the
availability (i.e., liquidity) of these securities could be adversely
affected by actions of the U.S. Government to tighten the availability of its
credit. Timely payment of principal and interest on pass-through securities
of FNMA or FHLMC is guaranteed by the respective entity.
Collateralized mortgage obligations ("CMOs") are debt obligations
collateralized by mortgage-related securities issued by GNMA, FNMA or FHLMC,
or by whole loans or private issuer pass-through securities. CMOs may be
issued by GNMA, FNMA, FHLMC or private issuers. CMOs are structured to direct
payments on underlying collateral to different series or classes of the
obligations. CMO classes may be specially structured in a manner that
provides any of a wide variety of investment characteristics, such as yield,
effective maturity and interest rate sensitivity. CMO structuring is
accomplished by in effect stripping out portions of the cash flows (comprised
of principal and interest payments) on the underlying mortgage assets and
prioritizing the payments of those cash flows. In the most extreme case, one
class will be entitled to receive all of the interest, but none of the
principal, from the underlying mortgage assets (the interest-only or "IO"
class) and one class will be entitled to receive all of the principal, but
none of the interest (the principal-only or "PO" class). CMOs may be
structured in other ways that, based on mathematical modeling or similar
techniques, are expected to provide certain results. As market conditions
change, however, and particularly during periods of rapid or unanticipated
changes in market interest rates, the attractiveness of a CMO class and the
ability of a structure to provide the anticipated investment characteristics
may be significantly reduced. Such changes can result in volatility in the
market value, and in some instances reduced liquidity, of the CMO class. The
Fund may invest up to 20% of its total assets in CMOs.
In determining the Fund's average maturity, the maturity of a
mortgage-related security is deemed to be its effective life (i.e., the
average time in which the principal amount of the security is repaid), as
estimated by Dreyfus based on scheduled principal amortization and an
anticipated rate of principal prepayments, which rate, in turn, is based on
past prepayment patterns, prevailing interest rates and other factors. The
effective life of a mortgage-related security generally is substantially
shorter than its stated maturity.
ASSET-BACKED SECURITIES. Asset-backed securities are securities that
represent direct or indirect participations in, or are secured by and payable
from, assets such as motor vehicle installment sales contracts, installment
loan contracts, leases of various types of real and personal property, and
receivables from revolving credit (credit card) agreements. Such assets are
securitized through the use of trusts and special purpose corporations. The
value of such securities partly depends on loan repayments by individuals,
which may be adversely affected during general downturns in the economy.
Payments or distributions of principal and interest on asset-backed
securities may be supported by credit enhancements, such as various forms of
cash collateral accounts or letters of credit. Like mortgage-related
securities, asset-backed securities are subject to the risk of prepayment.
The risk that recovery on repossessed collateral might be unavailable or
inadequate to support payments on asset-backed securities, however, is
greater than is the case for mortgage-backed securities.
FOREIGN SECURITIES. The Fund may purchase securities of foreign
issuers and may invest in obligations of foreign branches of domestic banks
and domestic branches of foreign banks. Investment in foreign securities
presents certain risks, including those resulting from fluctuations in
currency exchange rates, revaluation
Page 12
of currencies, adverse political and economic developments, the possible
imposition of currency exchange blockages or other foreign governmental laws
or restrictions, reduced availability of public information concerning
issuers, and the fact that foreign issuers generally are not subject to
uniform accounting, auditing and financial reporting standards or to other
regulatory practices and requirements comparable to those applicable to
domestic issuers. Moreover, securities of many foreign issuers may be less
liquid and their prices more volatile than those of comparable domestic
issuers. In addition, with respect to certain foreign countries, there is
the possibility of expropriation, confiscatory taxation and limitations on
the use or removal of funds or other assets of the Fund, including withholding
of dividends. Foreign securities may be subject to foreign government taxes
that would reduce the yield on such securities.
MUNICIPAL BONDS AND OTHER MUNICIPAL OBLIGATIONS. The Fund may invest
in debt obligations issued by or on behalf of states, territories and
possessions of the United States and the District of Columbia and their
political subdivisions, agencies and instrumentalities, or multistate
agencies or authorities. The Fund limits its investments in municipal
obligations to those obligations the interest on which is subject to federal
income tax. Municipal obligations generally include debt obligations issued
to obtain funds for various public purposes, as well as industrial
development bonds issued by public authorities. Municipal obligations are
classified as general obligation bonds, revenue bonds and notes. General
obligation bonds are secured by the issuer's pledge of its faith, credit and
taxing power for the payment of principal and interest. Revenue bonds are
payable from the revenue derived from a particular facility or class of
facilities or, in some cases, from the proceeds of a special excise or other
specific revenue source, but not from the general taxing power. Notes are
short-term instruments that are obligations of the issuing municipalities or
agencies and are sold in anticipation of a bond sale, collection of taxes or
receipt of other revenues. Municipal obligations bear fixed, floating or
variable rates of interest that are determined in some instances by formulas
under which the municipal obligation's interest rate will change directly or
inversely to changes in interest rates or an index, or multiples thereof, in
many cases subject to a maximum and minimum.
FIXED-INCOME SECURITIES. The Fund may invest in fixed-income
securities to achieve its investment objective. In periods of declining
interest rates, the Fund's yield (its income from portfolio investments over
a stated period of time) may tend to be higher than prevailing market rates,
and in periods of rising interest rates, the Fund's yield may tend to be
lower than prevailing market rates. Also, in periods of falling interest
rates, the inflow of net new money to the Fund from the continuous sales of
its shares will likely be invested in portfolio instruments producing lower
yield than the balance of the Fund's portfolio, thereby reducing the yield of
the Fund. In periods of rising interest rates, the opposite can be true. The
net asset value of a fund investing in fixed-income securities also may
change as general levels of interest rates fluctuate. When interest rates
rise, the value of a portfolio of fixed-income securities can be expected to
decline. Conversely, when interest rates decline, the value of a portfolio of
fixed-income securities can be expected to rise.
VARIABLE AND FLOATING RATE SECURITIES. The Fund may invest in
variable and floating rate securities. A variable rate security provides for
the adjustment of its interest either at predesignated periodic intervals or
whenever the market rate to which the security's interest rate is tied changes
.. A floating rate security provides for the automatic adjustment of its
interest whenever a specified interest rate changes. Interest rates on
floating rate securities are ordinarily tied to, and are a percentage of, a
widely recognized interest rate, such as the yield on 90-day U.S. Treasury
bills or the prime rate of a specified bank. These rates may change as often
as twice daily. Generally, changes in interest rates will have a smaller
effect on the market value of variable and floating rate securities than on
the market value of comparable fixed-income obligations. Thus, investing in
variable and floating rate securities generally allows less opportunity for
capital appreciation and depreciation than investing in comparable
fixed-income securities.
EURODOLLAR BONDS AND NOTES. The Fund may invest in Eurodollar bonds
and notes. Eurodollar bonds and notes are obligations that pay principal and
interest in U.S. dollars held in banks outside the
Page 13
United States, primarily in Europe. Investments in Eurodollar bonds and notes
involve risks that differ from investments in securities of domestic issuers.
(See "Foreign Securities.")
OTHER INVESTMENT COMPANIES. The Fund may invest in securities issued
by other investment companies to the extent that such investments are
consistent with the Fund's investment objective and policies and permissible
under the Investment Company Act of 1940, as amended ("1940 Act"). As a
shareholder of another investment company, the Fund would bear, along with
other shareholders, its pro rata portion of the other investment company's
expenses, including advisory fees. These expenses would be in addition to the
advisory and other expenses that the Fund bears directly in connection with
its own operations.
COMMERCIAL PAPER. The Fund may invest in commercial paper. These
instruments are short-term obligations issued by banks and corporations that
have maturities ranging from 2 to 270 days. Each instrument may be backed
only by the credit of the issuer or may be backed by some form of credit
enhancement, typically in the form of a guarantee by a commercial bank.
Commercial paper backed by guarantees of foreign banks may involve additional
risk due to the difficulty of obtaining and enforcing judgments against such
banks and the generally less restrictive regulations to which such banks are
subject. The Fund will only invest in commercial paper of U.S. and foreign
companies rated at the time of purchase at least A-1 by S&P, Prime-1 by
Moody's, F-1 by Fitch, Duff 1 by Duff & Phelps, Inc., or A1 by IBCA, Inc.
ECDS, ETDS AND YANKEE CDS. The Fund may invest in ECDs, ETDs and
Yankee CDs. ECDs are U.S. dollar-denominated certificates of deposit issued
by foreign branches of domestic banks. ETDs are U.S. dollar-denominated time
deposits in a foreign branch of a U.S. bank or a foreign bank. Yankee CDs are
certificates of deposit issued by a U.S. branch of a foreign bank denominated
in U.S. dollars and held in the United States. ECDs, ETDs and Yankee CDs are
subject to somewhat different risks than are the obligations of domestic
banks. (See "Foreign Securities.")
ILLIQUID INVESTMENTS. The Fund will not knowingly invest more than
15% of the value of its net assets in illiquid investments. Investments
currently considered to be illiquid include securities for which market
quotations are not readily available; repurchase agreements and time deposits
with maturities in excess of seven days; certain mortgage-related securities;
securities involved in swap, cap, collar and floor transactions; and certain
options traded in the over-the-counter market and securities used to cover
such options. The Fund may not be able to sell illiquid securities when
Dreyfus considers it desirable to do so or may have to sell such securities
at a price lower than the price that could be obtained if they were more
liquid. Illiquid securities may be more difficult to value due to the
unavailability of reliable market quotations for such securities, and
investment in illiquid securities may have an adverse impact on the Fund's
net asset value. See the SAI for more information regarding these
investments.
PORTFOLIO TURNOVER. While securities are purchased for the Fund on
the basis of potential for high current income and possible capital
appreciation and not for short-term trading profits, the Fund's portfolio
turnover rate may exceed 100%. A portfolio turnover rate of 100% would occur,
for example, if all the securities held by the Fund were replaced once in a
period of one year. A higher rate of portfolio turnover involves
correspondingly greater brokerage commissions and other expenses that must be
borne directly by the Fund and, thus, indirectly by its shareholders. In
addition, a high rate of portfolio turnover (100% or higher) may result in
the realization of larger amounts of short-term and/or long-term capital
gains that, when distributed to the Fund's shareholders, are taxable to them
at the then current rate. Nevertheless, securities transactions for the Fund
will be based only upon investment considerations and will not be limited by
any other considerations when Dreyfus deems it appropriate to make changes in
the Fund's assets.
LIMITING INVESTMENT RISK. The Fund is subject to a number of
investment limitations. Certain limitations are matters of fundamental policy
and may not be changed without the affirmative vote of
Page 14
the holders of a majority of the Fund's outstanding shares. As a fundamental
policy, the Fund may not (i) borrow money in an amount exceeding 331/3% of
the Fund's total assets at the time of borrowing; (ii) make loans or lend
securities in excess of 331/3% of the Fund's total assets; (iii) purchase,
with respect to 75% of the Fund's total assets, securities of any one issuer
representing more than 5% of the Fund's total assets (other than securities
issued or guaranteed by the U.S. Government, its agencies and
instrumentalities) or more than 10% of that issuer's outstanding voting
securities; and (iv) invest more than 25% of the value of the Fund's total
assets in the securities of one or more issuers conducting their principal
activities in the same industry; provided that there shall be no such
limitation on investments in obligations of the U.S. Government, state and
municipal governments and their political subdivisions. The SAI describes all
of the Fund's fundamental and non-fundamental restrictions.
The investment objective, policies, restrictions, practices and
procedures of the Fund, unless otherwise specified, may be changed without
shareholder approval. If the Fund's investment objective, policies,
restrictions, practices or procedures change, shareholders should consider
whether the Fund remains an appropriate investment in light of the
shareholder's then-current position and needs.
In order to permit the sale of the Fund's shares in certain states,
the Fund may make commitments more restrictive than the investment policies
and restrictions described in this Prospectus and in the SAI. Should the Fund
determine that any such commitment is no longer in the best interest of the
Fund, it may consider terminating sales of its shares in the states involved.
MANAGEMENT OF THE FUND
INVESTMENT MANAGER. Dreyfus, located at 200 Park Avenue, New York,
New York 10166, was formed in 1947. Dreyfus is a wholly-owned subsidiary of
Mellon Bank, which is a wholly-owned subsidiary of Mellon Bank Corporation
("Mellon"). As of May 31, 1996, Dreyfus managed or administered approximately
$80 billion in assets for more than 1.7 million investor accounts nationwide.
Dreyfus serves as the Fund's investment manager. Dreyfus supervises
and assists in the overall management of the Fund's affairs under an
Investment Management Agreement with the Fund, subject to the overall
authority of the Company's Board of Directors in accordance with Maryland
law. Pursuant to the Investment Management Agreement, Dreyfus provides, or
arranges for one or more third parties to provide, investment advisory,
administrative, custody, fund accounting and transfer agency services to the
Fund. As the Fund's investment manager, Dreyfus manages the Fund by making
investment decisions based on the Fund's investment objective, policies and
restrictions.
The Fund is managed by Ridgway H. Powell. Mr. Powell is a Vice
President of Mellon Bank and of Boston Safe Deposit and Trust Company. Mr.
Powell has been employed by Dreyfus as portfolio manager of the Fund since
the Fund commenced operations. Mr. Powell has held various offices with
Boston Safe Deposit and Trust Company since 1989, and he is a Chartered
Financial Analyst.
Mellon is a publicly-owned multibank holding company incorporated
under Pennsylvania law in 1971 and registered under the Bank Holding Company
Act of 1956, as amended. Mellon provides a comprehensive range of financial
products and services in domestic and selected international markets. Mellon
is among the twenty-five largest bank holding companies in the United States
based on total assets. Mellon's principal wholly-owned subsidiaries are
Mellon Bank, Mellon Bank (DE) National Association, Mellon Bank (MD), The
Boston Company, Inc., AFCO Credit Corporation and a number of companies known
as Mellon Financial Services Corporations. Through its subsidiaries,
including Dreyfus, Mellon managed approximately $237 billion in assets as of
March 31, 1996, including approximately $83 billion in mutual fund assets. As
of March 31, 1996, Mellon, through various subsidiaries, provided
non-investment services, such as custodial or administration services, for
approximately $886 billion in assets, including approximately $61 billion in
mutual fund assets.
Page 15
Under the Investment Management Agreement, the Fund has agreed to pay
Dreyfus a monthly fee at the annual rate of 0.55 of 1% of the value of the
Fund's average daily net assets. Dreyfus pays all of the Fund's expenses,
except brokerage fees, taxes, interest, Rule 12b-1 fees (if applicable) and
extraordinary expenses. In order to compensate Dreyfus for paying virtually
all of the Fund's expenses, the Fund's investment management fee is higher
than the investment advisory fees paid by most investment companies. Most, if
not all, such companies also pay for additional non-investment advisory
expenses that are not paid by such companies' investment advisers. From time
to time, Dreyfus may waive (either voluntarily or pursuant to applicable
state limitations) a portion of the investment management fees payable by the
Fund.
In addition, Investor shares may be subject to certain distribution
and shareholder servicing fees. See "Distribution Plan (Investor Shares
Only)."
Dreyfus may pay the Fund's distributor for shareholder services from
Dreyfus' own assets, including past profits, but not including the management
fee paid by the Fund. The Fund's distributor may use part or all of such
payments to pay Agents in respect of these services.
In allocating brokerage transactions for the Fund, Dreyfus seeks to
obtain the best execution of orders at the most favorable net price. Subject
to this determination, Dreyfus may consider, among other things, the receipt
of research services and/or the sale of shares of the Fund or other funds
managed, advised or administered by Dreyfus as factors in the selection of
broker-dealers to execute portfolio transactions for the Fund. See "Portfolio
Transactions"in the SAI.
Dreyfus is authorized to allocate purchase and sale orders for
portfolio securities to certain financial institutions, including, in the
case of agency transactions, financial institutions that are affiliated with
Dreyfus or Mellon Bank or that have sold shares of the Fund, if Dreyfus
believes that the quality of the transaction and the commission are
comparable to what they would be with other qualified brokerage firms. From
time to time, to the extent consistent with its investment objective, policies
and restrictions, the Fund may invest in securities of companies with which
Mellon Bank has a lending relationship.
DISTRIBUTOR -- The Fund's distributor is Premier Mutual Fund
Services, Inc. The Distributor is located at 60 State Street, Boston,
Massachusetts 02109. The Distributor is a wholly-owned subsidiary of FDI
Distribution Services, Inc., a provider of mutual fund administration
services, which in turn is a wholly-owned subsidiary of FDI Holdings, Inc.,
the parent company of which is Boston Institutional Group, Inc.
CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT, AND
SUB-ADMINISTRATOR. Mellon Bank (One Mellon Bank Center, Pittsburgh,
Pennsylvania 15258) is the Fund's custodian. The Fund's transfer and dividend
disbursing agent is Dreyfus Transfer, Inc. (the "Transfer Agent"), a
wholly-owned subsidiary of The Dreyfus Corporation, located at One American
Express Plaza, Providence, Rhode Island 02903. Premier Mutual Fund Services,
Inc. serves as the Fund's sub-administrator and, pursuant to a
Sub-Administration Agreement with Dreyfus, provides various administrative
and corporate secretarial services to the Fund.
HOW TO BUY FUND SHARES
GENERAL -- Investor shares are offered to any investor and may be purchased
through the Distributor or through Agents that have entered into Agreements
with the Distributor.
Class R shares are sold primarily to Banks acting on behalf of
customers having a qualified trust or investment account or relationship at
such institution, or to customers who have received and hold shares of the
Fund distributed to them by virtue of such an account or relationship. A
"Retirement Plan" is a qualified or non-qualified employee benefit plan or
other program, including pension, profit-sharing and other deferred
compensation plans, whether established by corporations, partnerships,
non-profit entities or state and local governments. Class R shares may be
purchased for a Retirement Plan
Page 16
only by a custodian, trustee, investment manager or other entity authorized
to act on behalf of such Plan. Institutions effecting transactions in Class
R shares for the accounts of their clients may charge their clients direct
fees in connection with such transactions.
Stock certificates are issued only upon your written request. No
certificates are issued for fractional shares. The Fund reserves the right to
reject any purchase order.
The minimum initial investment is $2,500, or $1,000 if you are a
client of an Agent that has made an aggregate minimum initial purchase for
its customers of $2,500. Subsequent investments must be at least $100.
However, the minimum initial investment for Dreyfus-sponsored Keogh Plans,
IRAs, SEP-IRAs and 403(b)(7) Plans with only one participant is $750, with no
minimum on subsequent purchases. Individuals who open an IRA also may open a
non-working spousal IRA with a minimum initial investment of $250. The
initial investment must be accompanied by the Fund's Account Application. For
full-time or part-time employees of Dreyfus or any of its affiliates or
subsidiaries, directors of Dreyfus, Board members of a fund advised by
Dreyfus including members of the Company's Board, or the spouse or minor
child of any of the foregoing, the minimum initial investment is $1,000. For
full-time or part-time employees of Dreyfus or any of its affiliates or
subsidiaries who elect to have a portion of their pay directly deposited into
their Fund account, the minimum initial investment is $50. The Fund reserves
the right to offer Fund shares without regard to minimum purchase
requirements to employees participating in certain qualified or non-qualified
employee benefit plans or other programs where contributions or account
information can be transmitted in a manner and form acceptable to the Fund.
The Fund reserves the right to vary further the initial and subsequent
investment minimum requirements at any time.
Investor shares are offered without regard to the minimum initial
investment requirements through Dreyfus-AUTOMATIC Asset Builder, Dreyfus
Government Direct Deposit Privilege or Dreyfus Payroll Savings Plan pursuant
to the Dreyfus Step Program (described under "Shareholder Services"). These
services enable you to make regularly scheduled investments and may provide yo
u with a convenient way to invest for long-term financial goals. You should
be aware, however, that periodic investment plans do not guarantee a profit
and will not protect an investor against loss in a declining market.
The Internal Revenue Code of 1986, as amended (the "Code"), imposes
various limitations on the amounts that may be contributed annually, but
generally do not directly affect the amount of plan assets that may be
invested in the Fund by a Retirement Plan. Participants and plan sponsors
should consult their tax advisers for details.
You may purchase Fund shares by check or wire, or through the Dreyfus
TELETRANSFER Privilege described below. Checks should be made payable to "The
Dreyfus Family of Funds" or, if for Dreyfus retirement plan accounts, to "The
Dreyfus Trust Company, Custodian." Payments to open new accounts which are
mailed should be sent to The Dreyfus Family of Funds, P.O. Box 9387,
Providence, Rhode Island 02940-9387, together with your Account Application
indicating which Class of shares is being purchased. For subsequent
investments, your Fund account number should appear on the check and an invest
ment slip should be enclosed and sent to The Dreyfus Family of Funds, P.O.
Box 105, Newark, New Jersey 07101-0105. For Dreyfus retirement plan accounts,
both initial and subsequent investments should be sent to The Dreyfus Trust
Company, Custodian, P.O. Box 6427, Providence, Rhode Island 02940-6427.
Neither initial nor subsequent investments should be made by third party
check. Purchase orders may be delivered in person only to a Dreyfus Financial
Center. THESE ORDERS WILL BE FORWARDED TO THE FUND AND WILL BE PROCESSED ONLY
UPON RECEIPT THEREBY. For the location of the nearest Dreyfus Financial
Center, please call the telephone number listed under "General Information."
Wire payments may be made if your bank account is in a commercial
bank that is a member of the Federal Reserve System or any other bank having
a correspondent bank in New York City. Immediately
Page 17
available funds may be transmitted by wire to Boston Safe Deposit and Trust
Company, together with the applicable Class' DDA # as shown below, for
purchase of Fund shares in your name:
DDA# 054518 Dreyfus Disciplined Intermediate Bond Fund/Investor
shares;
DDA# 054526 Dreyfus Disciplined Intermediate Bond Fund/Class R
shares.
The wire must include your Fund account number (for new accounts, your
Taxpayer Identification Number ("TIN") should be included instead), account
registration and dealer number, if applicable. If your initial purchase of
Fund shares is by wire, you should call 1-800-645-6561 after you have
completed the wire payment in order to obtain your Fund account number. You
should include your Fund account number on the Fund's Account Application and
promptly mail the Account Application to the Fund, as no redemptions will be
permitted until the Account Application is received. You may obtain further
information about remitting funds in this manner from your bank. All payments
should be made in U.S. dollars and, to avoid fees and delays, should be drawn
only on U.S. banks. A charge will be imposed if any check used for investment
in your account does not clear. The Fund makes available to certain large
institutions the ability to issue purchase instructions through compatible
computer facilities.
Subsequent investments also may be made by electronic transfer of
funds from an account maintained in a bank or other domestic financial
institution that is an Automated Clearing House ("ACH") member. You must
direct the institution to transmit immediately available funds through the
ACH to Boston Safe Deposit and Trust Company with instructions to credit your
Fund account. The instructions must specify your Fund account registration
and Fund account number PRECEDED BY THE DIGITS "4970" FOR INVESTOR SHARES AND
"4980" FOR CLASS R SHARES.
The Distributor may pay dealers a fee of up to 0.5% of the amount
invested through such dealers in Fund shares by employees participating in
qualified or non-qualified employee benefit plans or other programs where (i)
the employers or affiliated employers maintaining such plans or programs have
a minimum of 250 employees eligible for participation in such plans or
programs or (ii) such plan's or program's aggregate investment in the Dreyfus
Family of Funds or certain other products made available by the Distributor
to such plans or programs exceeds one million dollars ("Eligible Benefit
Plans"). The determination of the number of employees eligible for
participation in a plan or program shall be made on the date Fund shares are
first purchased by or on behalf of employees participating in such plan or
program and on each subsequent January 1st. All present holdings of shares of
funds in the Dreyfus Family of Funds by Eligible Benefit Plans will be
aggregated to determine the fee payable with respect to each purchase of Fund
shares. The Distributor reserves the right to cease paying these fees at any
time. The Distributor will pay such fees from its own funds, other than
amounts received from the Fund, including past profits or any other source
available to it.
Federal regulations require that you provide a certified TIN upon
opening or reopening an account. See "Dividends, Other Distributions and
Taxes" and the Fund's Account Application for further information concerning
this requirement. Failure to furnish a certified TIN to the Fund could
subject you to a $50 penalty imposed by the Internal Revenue Service (the
"IRS").
NET ASSET VALUE PER SHARE ("NAV") -- An investment portfolio's NAV
refers to the worth of one share. The NAV for Investor shares and Class R
shares is computed by adding, with respect to such Class of shares, the value
of the Fund's investments, cash, and other assets attributable to that Class,
deducting liabilities of the Class and dividing the result by the number of
shares of that Class outstanding. The valuation of assets for determining the
NAV for the Fund may be summarized as follows:
The portfolio securities of the Fund listed or traded on a stock
exchange, except as otherwise noted, are valued at the latest sale price. If
no sale is reported, the mean of the latest bid and asked prices is used.
Securities traded over-the-counter are priced at the mean of the latest bid
and asked prices but will be valued at the last sale price if required by
regulations of the SEC. When market quotations are
Page 18
not readily available, securities and other assets are valued at fair value
as determined in good faith in accordance with procedures established by the
Board of Directors.
Bonds are valued through valuations obtained from a commercial
pricing service or at the most recent mean of the bid and asked prices
provided by investment dealers in accordance with procedures established by
the Board of Directors.
NAV is determined on each day that the New York Stock Exchange
("NYSE") is open (a "business day"), as of the close of business of the
regular session of the NYSE (usually 4 p.m., Eastern Time). For purposes of
determining NAV, options and futures contracts will be valued 15 minutes
after the closing of trading on the floor of the NYSE. Investments and
requests to exchange or redeem shares received by the Fund in proper form
before such close of business are effective on, and will receive the price
determined on, that day (except investments made by electronic funds
transfer, which are effective two business days after your call). Investment,
exchange and redemption requests received after such close of business are
effective on, and receive the share price determined on, the next business
day.
The public offering price of Investor shares and Class R shares, both
of which are offered on a continuous basis, is the NAV of that Class.
DREYFUS TELETRANSFER PRIVILEGE -- You may purchase Fund shares
(minimum $500 and maximum $150,000 per day) by telephone if you have checked
the appropriate box and supplied the necessary information on the Fund's
Account Application or have filed a Shareholder Services Form with the Transfe
r Agent. The proceeds will be transferred between the bank account designated
in one of these documents and your Fund account. Only a bank account
maintained in a domestic financial institution which is an ACH member may be
so designated. The Fund may modify or terminate this Privilege at any time or
charge a service fee upon notice to shareholders. No such fee currently is
contemplated.
If you have selected the Dreyfus TELETRANSFER Privilege, you may
request a Dreyfus TELETRANSFER purchase of Fund shares by telephoning
1-800-645-6561 or, if calling from overseas, 516-794-5452.
SHAREHOLDER SERVICES
The services and privileges described under this heading may not be
available to clients of certain Agents and some Agents may impose certain
conditions on their clients which are different from those described in this
Prospectus. You should consult your Agent in this regard.
FUND EXCHANGES
You may purchase, in exchange for shares of a Class, shares of the
same class of certain other funds managed or administered by Dreyfus, to the
extent such shares are offered for sale in your state of residence. These
funds have different investment objectives which may be of interest to you.
If you desire to use this service, please call 1-800-645-6561 to determine if
it is available and whether any conditions are imposed on its use. WITH
RESPECT TO CLASS R SHARES HELD BY RETIREMENT PLANS, EXCHANGES MAY BE MADE
ONLY BETWEEN A SHAREHOLDER'S RETIREMENT PLAN ACCOUNT IN ONE FUND AND SUCH
SHAREHOLDER'S RETIREMENT PLAN ACCOUNT IN ANOTHER FUND.
To request an exchange, you or your Agent acting on your behalf must
give exchange instructions to the Transfer Agent in writing or by telephone.
Before any exchange, you must obtain and should review a copy of the current
prospectus of the fund into which the exchange is being made. Prospectuses
may be obtained by calling 1-800-645-6561. Except in the case of personal
retirement plans, the shares being exchanged must have a current value of at
least $500; furthermore, when establishing a new account by exchange, the
shares being exchanged must have a value of at least the minimum initial
investment required for the fund into which the exchange is being made. The
ability to issue exchange instructions by telephone is given to all Fund
shareholders automatically, unless you check the relevant "No" box on the
Account Application, indicating that you specifically refuse this privilege.
The Telephone Exchange Privilege may be established for an existing account
by written request, signed by
Page 19
all shareholders on the account, or by a Shareholder Services Form, also
available by calling 1-800-645-6561. If you previously have established the
Telephone Exchange Privilege, you may telephone exchange instructions by
calling 1-800-645-6561 or, if calling from overseas, 516-794-5452. See "How
to Redeem Fund Shares_Procedures." Upon an exchange, the following shareholder
services and privileges, as applicable and where available, will be
automatically carried over to the fund into which the exchange is made:
Telephone Exchange Privilege, Check Redemption Privilege, Wire Redemption
Privilege, Telephone Redemption Privilege, Dreyfus TELETRANSFER Privilege,
and the dividends and distributions payment option (except for Dreyfus
Dividend Sweep) selected by the investor.
Shares will be exchanged at the next determined NAV; however, a sales
load may be charged with respect to exchanges of Investor shares into funds
sold with a sales load. If you are exchanging Investor shares into a fund
that charges a sales load, you may qualify for share prices which do not
include the sales load or which reflect a reduced sales load, if the shares
of the fund from which you are exchanging were (a) purchased with a sales
load, (b) acquired by a previous exchange from shares purchased with a sales
load, or (c) acquired through reinvestment of dividends or other
distributions paid with respect to the foregoing categories of shares. To
qualify, at the time of the exchange you must notify the Transfer Agent or
your Agent must notify the Distributor. Any such qualification is subject to
confirmation of your holdings through a check of appropriate records. See
"Shareholder Services" in the SAI. No fees currently are charged shareholders
directly in connection with exchanges, although the Fund reserves the right,
upon not less than 60 days' written notice, to charge shareholders a nominal
fee in accordance with rules promulgated by the SEC. The Fund reserves the
right to reject any exchange request in whole or in part. The availability of
fund exchanges may be modified or terminated at any time upon notice to
shareholders.
The exchange of shares of one fund for shares of another is treated
for Federal income tax purposes as a sale of the shares given in exchange
and, therefore, an exchanging shareholder (other than a tax-exempt Retirement
Plan) may realize a taxable gain or loss.
DREYFUS AUTO-EXCHANGE PRIVILEGE
Dreyfus Auto-Exchange Privilege enables you to invest regularly (on a
semi-monthly, monthly, quarterly or annual basis), in exchange for shares of
the Fund, in shares of the same class of certain other funds in the Dreyfus
Family of Funds of which you are currently an investor. WITH RESPECT TO CLASS
R SHARES HELD BY RETIREMENT PLANS, EXCHANGES PURSUANT TO THE DREYFUS
AUTO-EXCHANGE PRIVILEGE MAY BE MADE ONLY BETWEEN A SHAREHOLDER'S RETIREMENT
PLAN ACCOUNT IN ONE FUND AND SUCH SHAREHOLDER'S RETIREMENT PLAN ACCOUNT IN
ANOTHER FUND. The amount you designate, which can be expressed either in
terms of a specific dollar or share amount ($100 minimum), will be exchanged
automatically on the first and/or the fifteenth day of the month according to
the schedule you have selected. Shares will be exchanged at the then-current
NAV; however, a sales load may be charged with respect to exchanges of
Investor shares into funds sold with a sales load. The right to exercise this
Privilege may be modified or canceled by the Fund or the Transfer Agent. You
may modify or cancel your exercise of this Privilege at any time by mailing
written notification to The Dreyfus Family of Funds, P.O. Box 9671,
Providence, Rhode Island 02940-9671. The Fund may charge a service fee for
the use of this Privilege. No such fee currently is contemplated. The
exchange of shares of one fund for shares of another is treated for Federal
income tax purposes as a sale of the shares given in exchange and,
therefore, an exchanging shareholder (other than a tax-exempt Retirement
Plan) may realize a taxable gain or loss. For more information concerning
this Privilege and the funds in the Dreyfus Family of Funds eligible to
participate in this Privilege, or to obtain a Dreyfus Auto-Exchange
Authorization Form, please call toll free 1-800-645-6561.
DREYFUS-AUTOMATIC ASSET BUILDERRegistration Mark
Dreyfus-AUTOMATIC Asset Builder permits you to purchase Fund shares
(minimum of $100 and maximum of $150,000 per transaction) at regular
intervals selected by you. Fund shares are purchased
Page 20
by transferring funds from the bank account designated by you. At your option,
the bank account designated by you will be debited in the specified amount,
and Fund shares will be purchased, once a month, on either the first or the
fifteenth day, or twice a month, on both days. Only an account maintained at
a domestic financial institution which is an ACH member may be so designated.
To establish a Dreyfus-AUTOMATIC Asset Builder account, you must file an
authorization form with the Transfer Agent. You may obtain the necessary
authorization form by calling 1-800-645-6561. You may cancel your
participation in this Privilege or change the amount of purchase at any time
by mailing written notification to The Dreyfus Family of Funds, P.O. Box
9671, Providence, Rhode Island 02940-9671 or, if for Dreyfus retirement plan
accounts, to The Dreyfus Trust Company, Custodian, P.O. Box 6427, Providence,
Rhode Island 02940-6427, and the notification will be effective three
business days following receipt. The Fund may modify or terminate this
Privilege at any time or charge a service fee. No such fee currently is
contemplated.
DREYFUS DIVIDEND OPTIONS
Dreyfus Dividend Sweep enables you to invest automatically dividends
or dividends and other distributions, if any, paid by the Fund in shares of
the same class of certain other funds in the Dreyfus Family of Funds of which
you are an investor. Shares of the other fund will be purchased at the
then-current NAV; however, a sales load may be charged with respect to
investments in shares of a fund sold with a sales load. If you are investing
in a fund that charges a sales load, you may qualify for share prices which
do not include the sales load or which reflect a reduced sales load. See
"Shareholder Services" in the SAI. Dreyfus Dividend ACH permits you to
transfer electronically on the payment date dividends or dividends and other
distributions, if any, from the Fund to a designated bank account. Only an
account maintained at a domestic financial institution which is an ACH member
may be so designated. Banks may charge a fee for this service.
For more information concerning these privileges, or to request a
Dreyfus Dividend Options Form, please call toll free 1-800-645-6561. You may
cancel these privileges by mailing written notification to The Dreyfus Family
of Funds, P.O. Box 9671, Providence, Rhode Island 02940-9671. Enrollment in
or cancellation of these privileges is effective three business days
following receipt. These privileges are available only for existing accounts
and may not be used to open new accounts. Minimum subsequent investments do
not apply for Dreyfus Dividend Sweep. The Fund may modify or terminate these
privileges at any time or charge a service fee. No such fee currently is
contemplated. Shares held under Keogh Plans, IRAs or other retirement plans
are not eligible for Dreyfus Dividend Sweep.
DREYFUS GOVERNMENT DIRECT DEPOSIT PRIVILEGE
Dreyfus Government Direct Deposit Privilege enables you to purchase
Fund shares (minimum of $100 and maximum of $50,000 per transaction) by
having Federal salary, Social Security, or certain veterans', military or
other payments from the Federal government automatically deposited into your
Fund account. You may deposit as much of such payments as you elect. You
should consider whether Direct Deposit of your entire payment into a fund
with fluctuating NAV, such as the Fund, may be appropriate for you. To enroll
in Dreyfus Government Direct Deposit, you must file with the Transfer Agent a
completed Direct Deposit Sign-Up Form for each type of payment that you
desire to include in this Privilege. The appropriate form may be obtained by
calling 1-800-645-6561. Death or legal incapacity will terminate your
participation in this Privilege. You may elect at any time to terminate your
participation by notifying in writing the appropriate Federal agency.
Further, the Fund may terminate your participation upon 30 days' notice to
you.
DREYFUS PAYROLL SAVINGS PLAN
Dreyfus Payroll Savings Plan permits you to purchase Fund shares
(minimum of $100 per transaction) automatically on a regular basis. Depending
upon the direct deposit program of your employer, you may have part or all of
your paycheck transferred to your existing Dreyfus account electronically
Page 21
through the ACH system at each pay period. To establish a Dreyfus Payroll
Savings Plan account, you must file an authorization form with your
employer's payroll department. Your employer must complete the reverse side
of the form and return it to The Dreyfus Family of Funds, P.O. Box 9671,
Providence, Rhode Island 02940-9671. You may obtain the necessary
authorization form by calling 1-800-645-6561. You may change the amount of
purchase or cancel the authorization only by written notification to your
employer. It is the sole responsibility of your employer, not the
Distributor, Dreyfus, the Fund, the Transfer Agent or any other person, to
arrange for transactions under the Dreyfus Payroll Savings Plan. The Fund may
modify or terminate this Privilege at any time or charge a service fee. No
such fee currently is contemplated.
DREYFUS STEP PROGRAM
Dreyfus Step Program enables you to purchase Investor shares without
regard to the Fund's minimum initial investment requirements through
Dreyfus-AUTOMATIC Asset Builder, Dreyfus Government Direct Deposit Privilege
or Dreyfus Payroll Savings Plan. To establish a Dreyfus Step Program account,
you must supply the necessary information on the Fund's Account Application
and file the required authorization form(s) with the Transfer Agent. For more
information concerning this program, or to request the necessary
authorization form(s), please call toll free 1-800-782-6620. You may
terminate your participation in this Program at any time by discontinuing
your participation in Dreyfus-AUTOMATIC-Asset Builder, Dreyfus Government
Direct Deposit Privilege or Dreyfus Payroll Savings Plan, as the case may be,
as provided under the terms of such Privilege(s). The Fund reserves the right
to redeem your account if you have terminated your participation in the
Program and your account's net asset value is $500 or less. See "How to
Redeem Fund Shares." The Fund may modify or terminate this Program at any
time. Investors who wish to purchase Investor shares through the Dreyfus Step
Program in conjunction with a Dreyfus-sponsored retirement plan may do so
only for IRAs, SEP-IRAs and IRA "Rollover Accounts."
AUTOMATIC WITHDRAWAL PLAN
The Automatic Withdrawal Plan permits you to request withdrawal of a
specified dollar amount (minimum of $50) on either a monthly or a quarterly
basis if you have a $5,000 minimum account.
Particular Retirement Plans, including Dreyfus-sponsored retirement
plans, may permit certain participants to establish an automatic withdrawal
plan from such Retirement Plans. Participants should consult their Retirement
Plan sponsor and tax adviser for details. Such a withdrawal plan is different
from the Automatic Withdrawal Plan. An application for the Automatic
Withdrawal Plan can be obtained by calling 1-800-645-6561. The Automatic
Withdrawal Plan may be ended at any time by the shareholder, the Fund or the
Transfer Agent. Shares for which certificates have been issued may not be
redeemed through the Automatic Withdrawal Plan.
RETIREMENT PLANS
The Fund offers a variety of pension and profit-sharing plans,
including Keogh Plans, IRAs, SEP-IRAs and IRA "Rollover Accounts," 401(k)
Salary Reduction Plans and 403(b)(7) Plans. Plan support services also are
available. You can obtain details on the various plans by calling the
following numbers toll free: for Keogh Plans, please call 1-800-358-5566;
for IRAs and IRA "Rollover Accounts," please call 1-800-645-6561; for
SEP-IRAs, 401(k) Salary Reduction Plans and 403(b)(7) Plans, please call
1-800-322-7880.
HOW TO REDEEM FUND SHARES
GENERAL -- You may request redemption of your shares at any time. Redemption
requests should be transmitted to the Transfer Agent as described below. When
a request is received in proper form, the Fund will redeem the shares at the
next determined NAV as described below. If you hold Fund shares of more than
one Class, any request for redemption must specify the Class of shares being
redeemed. If you fail to specify the Class of shares to be redeemed or if you
own fewer shares of the Class than speci-
Page 22
fied to be redeemed, the redemption request may be delayed until the Transfer
Agent receives further instructions from you or your Agent.
The Fund imposes no charges when shares are redeemed directly through
the Distributor. Agents or other institutions may charge their clients a
nominal fee for effecting redemptions of Fund shares. Any certificates
representing Fund shares being redeemed must be submitted with the redemption
request. The value of the shares redeemed may be more or less than their
original cost, depending upon the Fund's then-current NAV.
The Fund ordinarily will make payment for all shares redeemed within
seven days after receipt by the Transfer Agent of a redemption request in
proper form, except as provided by the rules of the SEC. HOWEVER, IF YOU HAVE
PURCHASED FUND SHARES BY CHECK, BY THE DREYFUS TELETRANSFER PRIVILEGE, OR
THROUGH THE DREYFUS-AUTOMATIC ASSET BUILDER AND SUBSEQUENTLY SUBMIT A WRITTEN
REDEMPTION REQUEST TO THE TRANSFER AGENT, THE REDEMPTION PROCEEDS WILL BE
TRANSMITTED TO YOU PROMPTLY UPON BANK CLEARANCE OF YOUR PURCHASE CHECK,
DREYFUS TELETRANSFER PURCHASE, OR DREYFUS-AUTOMATIC ASSET BUILDER ORDER,
WHICH MAY TAKE UP TO EIGHT BUSINESS DAYS OR MORE. IN ADDITION, THE FUND WILL
NOT HONOR REDEMPTION CHECKS UNDER THE CHECK REDEMPTION PRIVILEGE, AND WILL
REJECT REQUESTS TO REDEEM SHARES BY WIRE OR TELEPHONE OR PURSUANT TO THE
DREYFUS TELETRANSFER PRIVILEGE FOR A PERIOD OF EIGHT BUSINESS DAYS AFTER
RECEIPT BY THE TRANSFER AGENT OF THE PURCHASE CHECK, THE DREYFUS TELETRANSFER
PURCHASE, OR THE DREYFUS-AUTOMATIC ASSET BUILDER ORDER AGAINST WHICH SUCH
REDEMPTION IS REQUESTED. THESE PROCEDURES WILL NOT APPLY IF YOUR SHARES WERE
PURCHASED BY WIRE PAYMENT, OR IF YOU OTHERWISE HAVE A SUFFICIENT COLLECTED
BALANCE IN YOUR ACCOUNT TO COVER THE REDEMPTION REQUEST. PRIOR TO THE TIME
ANY REDEMPTION IS EFFECTIVE, DIVIDENDS ON SUCH SHARES WILL ACCRUE AND BE
PAYABLE, AND YOU WILL BE ENTITLED TO EXERCISE ALL OTHER RIGHTS OF BENEFICIAL
OWNERSHIP. Fund shares will not be redeemed until the Transfer Agent has
received your Account Application.
The Fund reserves the right to redeem your account at its option upon
not less than 45 days' written notice if the net asset value of your account
is $500 or less and remains so during the notice period.
PROCEDURES -- You may redeem Fund shares by using the regular
redemption procedure through the Transfer Agent, the Check Redemption
Privilege, the Wire Redemption Privilege, the Telephone Redemption Privilege,
or the Dreyfus TELETRANSFER Privilege. Other redemption procedures may be in
effect for clients of certain Agents and institutions. The Fund makes
available to certain large institutions the ability to issue redemption
instructions through compatible computer facilities.
You may redeem Fund shares by telephone if you have checked the
appropriate box on the Fund's Account Application or have filed a Shareholder
Services Form with the Transfer Agent. If you select the Telephone Redemption
Privilege or Telephone Exchange Privilege, which is granted automatically
unless you refuse it, you authorize the Transfer Agent to act on telephone
instructions from any person representing himself or herself to be you, or a
representative of your Agent, and reasonably believed by the Transfer Agent
to be genuine. The Fund will require the Transfer Agent to employ reasonable
procedures, such as requiring a form of personal identification, to confirm
that instructions are genuine and, if it does not follow such procedures, the
Fund or the Transfer Agent may be liable for any losses due to unauthorized
or fraudulent instructions. Neither the Fund nor the Transfer Agent will be
liable for following telephone instructions reasonably believed to be
genuine.
During times of drastic economic or market conditions, you may
experience difficulty in contacting the Transfer Agent by telephone to
request a redemption or an exchange of Fund shares. In such cases, you should
consider using the other redemption procedures described herein. Use of these
other redemption procedures may result in your redemption request being
processed at a later time than it would have been if telephone redemption had
been used. During the delay, the Fund's NAV may fluctuate.
Page 23
REGULAR REDEMPTION -- Under the regular redemption procedure, you may
redeem your shares by written request mailed to The Dreyfus Family of Funds,
P.O. Box 9671, Providence, Rhode Island 02940-9671 or, if for Dreyfus
retirement plan accounts, to The Dreyfus Trust Company, Custodian, P.O. Box
6427, Providence, Rhode Island 02940-6427. Redemption requests may be
delivered in person only to a Dreyfus Financial Center. THESE REQUESTS WILL
BE FORWARDED TO THE FUND AND WILL BE PROCESSED ONLY UPON RECEIPT THEREBY. For
the location of the nearest Dreyfus Financial Center, please call the
telephone number listed under "General Information." Redemption requests must
be signed by each shareholder, including each owner of a joint account, and
each signature must be guaranteed. The Transfer Agent has adopted standards
and procedures pursuant to which signature-guarantees in proper form
generally will be accepted from domestic banks, brokers, dealers, credit
unions, national securities exchanges, registered securities associations,
clearing agencies and savings associations, as well as from participants in
the New York Stock Exchange Medallion Signature Program, the Securities
Transfer Agents Medallion Program ("STAMP"), and the Stock Exchanges
Medallion Program. For more information with respect to signature-guarantees,
please call the telephone number listed under "General Information."
Redemption proceeds of at least $1,000 will be wired to any member
bank of the Federal Reserve System in accordance with a written
signature-guaranteed request.
CHECK REDEMPTION PRIVILEGE _ You may request on the Account
Application, Shareholder Services Form or by later written request that the
Fund provide Redemption Checks drawn on the Fund's account. Redemption Checks
may be made payable to the order of any person in the amount of $500 or more.
Potential fluctuations in the NAV of the Fund's shares should be considered
in determining the amount of the check. Redemption Checks should not be used
to close your account. Redemption Checks are free, but the Transfer Agent
will impose a fee for stopping payment of a Redemption Check upon your
request or if the Transfer Agent cannot honor the Redemption Check due to
insufficient funds or other valid reason. You should date your Redemption
Checks with the current date when you write them. Please do not postdate your
Redemption Checks. If you do, the Transfer Agent will honor, upon
presentment, even if presented before the date of the check, all postdated
Redemption Checks which are dated within six months of presentment for
payment, if they are otherwise in good order. Shares for which certificates
have been issued may not be redeemed by Redemption Check. This Privilege may
be modified or terminated at any time by the Fund or the Transfer Agent upon
notice to shareholders.
WIRE REDEMPTION PRIVILEGE -- You may request by wire or telephone
that redemption proceeds (minimum $1,000) be wired to your account at a bank
which is a member of the Federal Reserve System, or a correspondent bank if
your bank is not a member. To establish the Wire Redemption Privilege, you
must check the appropriate box and supply the necessary information on the
Fund's Account Application or file a Shareholder Services Form with the
Transfer Agent. You may direct that redemption proceeds be paid by check
(maximum $150,000 per day) made out to the owners of record and mailed to
your address. Redemption proceeds of less than $1,000 will be paid
automatically by check. Holders of jointly registered Fund or bank accounts
may have redemption proceeds of only up to $250,000 wired within any 30-day
period. You may telephone redemption requests by calling 1-800-645-6561 or,
if calling from overseas, 516-794-5452. The Fund reserves the right to refuse
any redemption request, including requests made shortly after a change of
address, and may limit the amount involved or the number of such requests.
This Privilege may be modified or terminated at any time by the Transfer
Agent or the Fund. The Fund's SAI sets forth instructions for transmitting
redemption requests by wire. Shares held under Keogh Plans, IRAs or other
retirement plans, and shares for which certificates have been issued, are not
eligible for this Privilege.
TELEPHONE REDEMPTION PRIVILEGE -- You may redeem Fund shares (maximum
$150,000 per day) by telephone if you checked the appropriate box on the
Fund's Account Application or have filed a
Page 24
Shareholder Services Form with the Transfer Agent. The redemption proceeds
will be paid by check and mailed to your address. You may telephone redemption
instructions by calling 1-800-645-6561 or, if calling from overseas,
516-794-5452. The Fund reserves the right to refuse any redemption request
made by telephone, including requests made shortly after a change of address,
and may limit the amount involved or the number of such requests. This
Privilege may be modified or terminated at any time by the Transfer Agent or
the Fund. Shares held under Keogh Plans, IRAs or other retirement plans, and
shares for which certificates have been issued, are not eligible for this
Privilege.
DREYFUS TELETRANSFER PRIVILEGE -- You may redeem Fund shares (minimum
$500 per day) by telephone if you have checked the appropriate box and
supplied the necessary information on the Fund's Account Application or have
filed a Shareholder Services Form with the Transfer Agent. The proceeds will
be transferred between your Fund account and the bank account designated in
one of these documents. Only a bank account maintained in a domestic
financial institution which is an ACH member may be so designated. Redemption
proceeds will be on deposit in your account at an ACH member bank ordinarily
two days after receipt of the redemption request or, at your request, paid by
check (maximum $150,000 per day) and mailed to your address. Holders of
jointly registered Fund or bank accounts may redeem through the Dreyfus
TELETRANSFER Privilege for transfer to their bank account only up to $250,000
within any 30-day period. The Fund reserves the right to refuse any request
made by telephone, including requests made shortly after a change of address,
and may limit the amount involved or the number of such requests. The Fund
may modify or terminate this Privilege at any time or charge a service fee
upon notice to shareholders. No such fee currently is contemplated.
If you have selected the Dreyfus TELETRANSFER Privilege, you may
request a Dreyfus TELETRANSFER redemption of Fund shares by telephoning
1-800-645-6561 or, if calling from overseas, 516-794-5452. Shares held under
Keogh Plans, IRAs or other retirement plans, and shares issued in certificate
form, are not eligible for this Privilege.
DISTRIBUTION PLAN
(INVESTOR SHARES ONLY)
Investor shares are subject to a Distribution Plan (the "Plan")
adopted pursuant to Rule 12b-1 under the 1940 Act ("Rule 12b-1"). The
Investor shares of the Fund bear some of the cost of selling those shares
under the Plan. The Plan allows the Fund to spend annually up to 0.25% of its
average daily net assets attributable to Investor shares to compensate
Dreyfus Service Corporation, an affiliate of Dreyfus, for shareholder
servicing activities and the Distributor for shareholder servicing activities
and for activities or expenses primarily intended to result in the sale of
Investor shares of the Fund. The Plan allows the Distributor to make payments
from the Rule 12b-1 fees it collects from the Fund to compensate Agents that
have entered into Agreements with the Distributor. Under the Agreements, the
Agents are obligated to provide distribution-related services with regard to
the Fund and/or shareholder services to the Agent's clients that own Investor
shares of the Fund.
The Fund and the Distributor may suspend or reduce payments under the
Plan at any time, and payments are subject to the continuation of the Fund's
Plan and the Agreements described above. From time to time, the Agents, the
Distributor and the Fund may agree to voluntarily reduce the maximum fees
payable under the Plan. See the SAI for more details on the Plan.
Potential investors should read this Prospectus in light of the terms
governing Agreements with their Agents. An Agent entitled to receive
compensation for selling and servicing the Fund's shares may receive
different compensation with respect to one class of shares over another.
Page 25
DIVIDENDS, OTHER DISTRIBUTIONS AND TAXES
The Fund declares daily and pays monthly dividends from its net
investment income and distributes net realized capital and foreign currency
gains, if any, once a year, but it may make distributions on a more frequent
basis to comply with the distribution requirements of the Code, in all events
in a manner consistent with the provisions of the 1940 Act. The Fund will not
make distributions from net realized capital gains unless all capital loss
carryovers, if any, have been utilized or have expired. Shares begin accruing
dividends on the day following the date of purchase. The Fund's earnings for
Saturdays, Sundays and holidays are declared as dividends on the next
business day. If you redeem all shares in your account at any time during the
month, all dividends to which you are entitled will be paid to you along with
the proceeds of the redemption. All expenses are accrued daily and deducted
before declaration of dividends to investors. Dividends paid by each Class
are calculated at the same time and in the same manner and are in the same
amount, except that the expenses attributable solely to a particular Class
are borne exclusively by that Class. Investor shares will receive lower per
share dividends than Class R shares because of the higher expenses borne by
the Investor shares. See "Expense Summary."
Investors other than qualified Retirement Plans may choose whether to
receive dividends and other distributions in cash, to receive dividends in
cash and reinvest other distributions in additional Fund shares at NAV, or to
reinvest both dividends and other distributions or additional Fund shares at
NAV; dividends and other distributions payable to qualified Retirement Plans
are reinvested automatically in additional Fund shares at NAV.
It is expected that the Fund will continue to qualify for treatment
as a "regulated investment company" under the Code so long as such
qualification is in the best interests of its shareholders. Such
qualification will relieve the Fund of any liability for federal income tax
to the extent its earnings are and realized gains distributed in accordance
with applicable provisions of the Code.
Dividends derived from net investment income, together with
distributions from net realized short-term capital gains, certain foreign
currency gains and all or a portion of any gains realized from the sale or
other disposition of certain market discount bonds (collectively, "dividend
distributions"), paid by the Fund are taxable to U.S. shareholders, including
certain non-qualified Retirement Plans, as ordinary income to the extent of
the Fund's earnings and profits, whether received in cash or reinvested in
additional Fund shares. Distributions from the Fund's net capital gain (the
excess of net long-term capital gain over net short-term capital loss) are
taxable to such shareholders as long-term capital gains, regardless of how
long the shareholders have held their Fund shares and whether such
distributions are received in cash or reinvested in additional Fund shares.
The net capital gain of an individual generally will not be subject to
federal income tax at a rate in excess of 28%. Dividends and other
distributions also may be subject to state and local taxes.
Dividend distributions paid by the Fund to a non-resident foreign
investor generally are subject to U.S. withholding tax at the rate of 30%,
unless the non-resident foreign investor claims the benefit of a lower rate
specified in a tax treaty. Capital gain distributions paid by the Fund to a
non-resident foreign investor, as well as the proceeds of any redemptions
from a non-resident foreign investor, regardless of the extent to which gain
or loss may be realized, generally are not subject to U.S. withholding tax.
However, such distributions may be subject to backup withholding, as
described below, unless the foreign investor certifies his non-U.S. residency
status.
Notice as to the tax status of your dividends and other distributions
will be mailed to you annually. You also will receive periodic summaries of
your account that will include information as to dividends and capital gain
distributions, if any, paid during the year.
Dividends and other distributions paid by the Fund to qualified
Retirement Plans ordinarily will not be subject to taxation until the
proceeds are distributed from the Retirement Plans. The Fund will not report
to the IRS distributions paid to such plans. Generally, distributions from
qualified Retirement
Page 26
Plans, except those representing returns of non-deductible contributions
thereto, will be taxable as ordinary income and, if made prior to the time
the participant reaches age 59-1/2, generally will be subject to an additional
tax equal to 10% of the taxable portion of the distribution. If the
distribution from such a Retirement Plan (other than certain governmental or
church plans) for any taxable year following the year in which the participant
reaches age 70-1/2 is less than the "minimum required distribution" for that
taxable year, an excise tax equal to 50% of the deficiency may be imposed by
the IRS. The administrator, trustee or custodian of such a Retirement Plan
will be responsible for reporting distributions from such plans to the IRS.
Moreover, certain contributions to a qualified Retirement Plan in excess of
the amounts permitted by law may be subject to an excise tax. If a
distributee of an "eligible rollover distribution" from a qualified Retirement
Plan does not elect to have the eligible rollover distribution paid directly
from the plan to an eligible retirement plan in a "direct rollover," the
eligible rollover distribution is subject to a 20% income tax withholding.
With respect to individual investors and certain non-qualified
Retirement Plans, federal laws and regulations generally require the Fund to
withhold ("backup withholding") and remit to the U.S. Treasury 31% of
dividends, capital gain distributions and any redemption proceeds, regardless
of the extent to which gain or loss may be realized, paid to such a
shareholder if such shareholder fails to certify that the TIN furnished in
connection with opening an account is correct and that such shareholder has
not received notice from the IRS that the shareholder's subject to backup
withholding as a result of a failure to properly report taxable dividend or
interest income on a federal income tax return. Furthermore, the IRS may
notify the Fund to institute backup withholding if the IRS determines that
shareholder's TIN is incorrect or if that shareholder has failed to properly
report taxable dividend and interest income on a federal income tax return.
A TIN is either the Social Security number or employer identification
number of the record owner of the account. Any tax withheld as a result of
backup withholding does not constitute an additional tax imposed on the
record owner of the account and may be claimed as a credit on the record
owner's federal income tax return.
The Fund may be subject to a non-deductible 4% excise tax, measured
with respect to certain undistributed amounts of taxable investment income
and capital gains.
You should consult your tax advisers regarding specific questions as
to federal, state or local taxes.
PERFORMANCE INFORMATION
For purposes of advertising, performance for each Class may be
calculated on the basis of average annual total return and/or total return.
These total return figures reflect changes in the price of the shares and
assume that any income dividends and/or capital gains distributions made by
the Fund during the measuring period were reinvested in shares of the same
Class. These figures also take into account any applicable distribution and
shareholder servicing fees. As a result, at any given time, the performance
of Investor shares should be expected to be lower than that of Class R
shares. Performance for each Class will be calculated separately.
Average annual total return is calculated pursuant to a standardized
formula, which assumes that an investment was purchased with an initial
payment of $1,000 and that the investment was redeemed at the end of a stated
period of time, after giving effect to the reinvestment of dividends and
other distributions during the period. The return is expressed as a
percentage rate which, if applied on a compounded annual basis, would result
in the redeemable value of the investment at the end of the period.
Advertisements of the Fund's performance will include the Fund's average
annual total return for one, five and ten year periods, or for shorter periods
depending upon the length of time during which the Fund has operated.
Computations of average annual total return for periods of less than one year
represent an annualization of the Fund's actual total return for the
applicable period.
Page 27
Total return is computed on a per share basis and assumes the
reinvestment of dividends and other distributions. Total return generally is
expressed as a percentage rate which is calculated by combining the income
and principal changes for a specified period and dividing by the NAV at the
beginning of the period. Advertisements may include the percentage rate of
total return or may include the value of a hypothetical investment at the end
of the period which assumes the application of the percentage rate of total
return.
The Fund may also advertise the yield on a Class of shares. The
Fund's yield is calculated by dividing a Class of shares' annualized net
investment income per share during a recent 30-day (or one month) period by
the NAVof such Class on the last day of that period. Since yields fluctuate,
yield data cannot necessarily be used to compare an investment in a Class of
shares with bank deposits, savings accounts, and similar investment
alternatives which often provide an agreed-upon or guaranteed fixed yield for
a stated period of time.
Performance will vary from time to time and past results are not
necessarily representative of future results. You should remember that
performance is a function of portfolio management in selecting the type and
quality of portfolio securities and is affected by operating expenses.
Performance information, such as that described above, may not provide a
basis for comparison with other investments or other investment companies
using a different method of calculating performance.
The Fund may compare the performance of its shares with various
industry standards of performance including Lipper Analytical Services, Inc.
ratings, the Lehman Brothers Aggregate Bond Index, other indices created by
Lehman Brothers, CDA Technologies indices, the Consumer Price Index, and the
Dow Jones Industrial Average. Performance rankings as reported in CHANGING
TIMES, BUSINESS WEEK, INSTITUTIONAL INVESTOR, THE WALL STREET JOURNAL,
IBC/DONOGHUE'S MONEY FUND REPORT, MUTUAL FUND FORECASTER, NO LOAD INVESTOR,
MONEY MAGAZINE, MORNINGSTAR MUTUAL FUND VALUES, U.S. NEWS AND WORLD REPORT,
FORBES, FORTUNE, BARRON'S and similar publications may also be used in
comparing the Fund's performance. Furthermore, the Fund may quote its shares'
total returns and yields in advertisements or in shareholder reports. The
Fund may also advertise non-standardized performance information, such as
total return for periods other than those required to be shown or cumulative
performance data. The Fund may advertise a quotation of yield or other
similar quotation demonstrating the income earned or distributions made by
the Fund.
GENERAL INFORMATION
The Company was incorporated in Maryland on August 6, 1987 under the
name The Laurel Funds, Inc., and changed its name to The Dreyfus/Laurel
Funds, Inc. on October 17, 1994. The Company is registered with the SEC under
the 1940 Act as an open-end management investment company. The Company has an
authorized capitalization of 25 billion shares of $0.001 par value stock with
equal voting rights. The Fund is a portfolio of the Company. The Fund's
shares are classified into two Classes_Investor shares and Class R shares.
The Company's Articles of Incorporation permit the Board of Directors to
create an unlimited number of investment portfolios (each a "fund").
Each share (regardless of Class) has one vote. All shares of all
funds (and Classes thereof) vote together as a single class, except as to any
matter for which a separate vote of any fund or Class is required by the 1940
Act, and except as to any matter which affects the interests of one or more
particular funds or Classes, in which case only the shareholders of the
affected fund or Classes are entitled to vote, each as a separate class. Only
holders of Investor shares will be entitled to vote on matters submitted to
shareholders pertaining to the Distribution Plan relating to that Class.
Unless otherwise required by the 1940 Act, ordinarily it will not be
necessary for the Fund to hold annual meetings of shareholders. As a result,
Fund shareholders may not consider each year the election of Directors or the
appointment of auditors. However, the holders of at least 10% of the shares
out-
Page 28
standing and entitled to vote may require the Company to hold a special
meeting of shareholders for purposes of removing a Director from office and
for any other proper purpose. Company shareholders may remove a Director by
the affirmative vote of a majority of the Company's voting shares. In
addition, the Board of Directors will call a meeting of shareholders for the
purpose of electing Directors if, at any time, less than a majority of the
Directors then holding office have been elected by shareholders.
The Transfer Agent maintains a record of your ownership and will send
you confirmations and statements of account.
Shareholder inquiries may be made by writing to the Fund at 144 Glenn
Curtiss Boulevard, Uniondale, New York 11556-0144, or by calling toll free
1-800-645-6561.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND IN THE
FUND'S OFFICIAL SALES LITERATURE IN CONNECTION WITH THE OFFER OF THE FUND'S
SHARES, AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER IN ANY STATE IN WHICH, OR TO ANY PERSON TO WHOM,
SUCH OFFERING MAY NOT LAWFULLY BE MADE.
Page 29
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Page 31
DREYFUS
Disciplined
Intermediate
Bond Fund
Prospectus
(LION LOGO)
Registration Mark
Copy Rights 1996 Dreyfus Service Corporation
302/702p070196
__________________________________________________________________________
DREYFUS DISCIPLINED INTERMEDIATE BOND FUND
INVESTOR SHARES AND CLASS R SHARES
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
JULY 1, 1996
__________________________________________________________________________
This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the current Prospectus
of the Dreyfus Disciplined Intermediate Bond Fund (the "Fund"), dated July
1, 1996, as it may be revised from time to time. The Fund is a separate,
diversified portfolio of The Dreyfus/Laurel Funds, Inc. (formerly, The
Laurel Funds, Inc.), an open-end management investment company (the
"Company"), known as a mutual fund. To obtain a copy of the Fund's
Prospectus, please write to the Fund at 144 Glenn Curtiss Boulevard,
Uniondale, New York 11556-0144, or call one of the following numbers:
Call Toll Free 1-800-645-6561
In New York City -- Call 1-718-895-1206
On Long Island -- Call 516-794-5452
The Dreyfus Corporation ("Dreyfus") serves as the Fund's investment
manager.
Premier Mutual Fund Services, Inc. (the "Distributor") is the
distributor of the Fund's shares.
TABLE OF CONTENTS
Page
Investment Objective and Management Policies . . . . . B-2
Management of the Fund . . . . . . . . . . . . . . . . B-20
Management Arrangements. . . . . . . . . . . . . . . . B-26
Purchase of Fund Shares. . . . . . . . . . . . . . . . B-27
Distribution Plan. . . . . . . . . . . . . . . . . . . B-28
Redemption of Fund Shares. . . . . . . . . . . . . . . B-29
Shareholder Services . . . . . . . . . . . . . . . . . B-31
Determination of Net Asset Value . . . . . . . . . . . B-34
Dividends, Other Distributions and Taxes . . . . . . . B-34
Portfolio Transactions . . . . . . . . . . . . . . . . B-38
Performance Information. . . . . . . . . . . . . . . . B-39
Information About the Fund . . . . . . . . . . . . . . B-41
Custodian, Transfer and Dividend Disbursing Agent,
Counsel and Independent Auditors . . . . . . . . . . B-41
Financial Statements . . . . . . . . . . . . . . . . . B-41
Appendix . . . . . . . . . . . . . . . . . . . . . . . B-42
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled
"Description of the Fund."
Portfolio Securities
Government Obligations. The Fund may invest in a variety of U.S.
Treasury obligations, which differ only in their interest rates,
maturities and times of issuance: (a) U.S. Treasury bills have a maturity
of one year or less, (b) U.S. Treasury notes have maturities of one to ten
years, and (c) U.S. Treasury bonds generally have maturities of greater
than ten years.
In addition to U.S. Treasury obligations, the Fund may invest in
obligations issued or guaranteed by U.S. Government agencies and
instrumentalities which are supported by any of the following: (a) the
full faith and credit of the U.S. Treasury (such as Government National
Mortgage Association ("GNMA") participation certificates), (b) the right
of the issuer to borrow an amount limited to a specific line of credit
from the U.S. Treasury, (c) the discretionary authority of the U.S.
Government agency or instrumentality, or (d) the credit of the
instrumentality. (Examples of agencies and instrumentalities are: Federal
Land Banks, Federal Housing Administration, Farmers Home Administration,
Export-Import Bank of the United States, Central Bank for Cooperatives,
Federal Intermediate Credit Banks, Federal Home Loan Banks, General
Services Administration, Maritime Administration, Tennessee Valley
Authority, District of Columbia Armory Board, Inter-American Development
Bank, Asian-American Development Bank, Student Loan Marketing Association,
International Bank for Reconstruction and Development, Federal Home Loan
Mortgage Corporation ("FHLMC"), and Federal National Mortgage Association
("FNMA")). No assurance can be given that the U.S. Government will provide
financial support to such U.S. Government agencies or instrumentalities
described in (b), (c) and (d) in the future, other than as set forth
above, because it is not obligated to do so by law.
Repurchase Agreements. The Fund may enter into repurchase agreements
with U.S. Government securities dealers recognized by the Federal Reserve
Board, with member banks of the Federal Reserve System, or with such other
brokers or dealers that meet the credit guidelines of the Board of
Directors. In a repurchase agreement, the Fund buys a security from a
seller that has agreed to repurchase the same security at a mutually
agreed upon date and price. The Fund's resale price will be in excess of
the purchase price, reflecting an agreed upon interest rate. This interest
rate is effective for the period of time the Fund is invested in the
agreement and is not related to the coupon rate on the underlying
security. Repurchase agreements may also be viewed as a fully
collateralized loan of money by the Fund to the seller. The period of
these repurchase agreements will usually be short, from overnight to one
week, and at no time will the Fund invest in repurchase agreements for
more than one year. The Fund will always receive as collateral securities
whose market value including accrued interest is, and during the entire
term of the agreement remains, at least equal to 100% of the dollar amount
invested by the Fund in each agreement, and the Fund will make payment for
such securities only upon physical delivery or upon evidence of book entry
transfer to the account of the Custodian. If the seller defaults, the Fund
might incur a loss if the value of the collateral securing the repurchase
agreement declines and might incur disposition costs in connection with
liquidating the collateral. In addition, if bankruptcy proceedings are
commenced with respect to the seller of a security which is the subject of
a repurchase agreement, realization upon the collateral by the Fund may be
delayed or limited. Dreyfus seeks to minimize the risk of loss through
repurchase agreements by analyzing the creditworthiness of the obligors
under repurchase agreements, in accordance with the credit guidelines of
the Company's Board of Directors.
When-Issued Securities. In when-issued transactions, delivery and
payment for the securities normally takes place approximately 7 to 45 days
after the date the buyer commits to purchase them (delivery and payment
could take place considerably later in the case of some mortgage-related
securities). The payment obligation and the interest rate that will be
received on securities purchased on a when-issued basis are each fixed at
the time the buyer enters into the commitment. The Fund will make
commitments to purchase such securities only with the intention of
actually acquiring the securities, but the Fund may sell these securities
or dispose of the commitment before the settlement date if Dreyfus deems
it advisable as a matter of investment strategy. Cash or marketable high-
grade debt securities equal to the amount of the above commitments will be
segregated on the Fund's records. For the purpose of determining the
adequacy of these securities the segregated securities will be valued at
market. If the market value of such securities declines, additional cash
or securities will be segregated on the Fund's records on a daily basis so
that the market value of the account will equal the amount of such
commitments by the Fund.
Securities purchased on a when-issued basis and the securities held
by the Fund are subject to changes in market value based upon the public's
perception of changes in the level of interest rates. Generally, the value
of such securities will fluctuate inversely to changes in interest rates
- -- i.e., they will increase in value when interest rates fall and decrease
in value when interest rates rise. Therefore, if in order to achieve
higher interest income the Fund remains substantially fully invested at
the same time that it has purchased securities on a "when-issued" basis,
there will be a greater possibility of fluctuation in the Fund's net asset
value.
When payment for when-issued securities is due, the Fund will meet
its obligations from then-available cash flow, the sale of segregated
securities, the sale of other securities or, and although it would not
normally expect to do so, from the sale of the when-issued securities
themselves (which may have a market value greater or less than the Fund's
payment obligation). The sale of securities to meet such obligations
carries with it a greater potential for the realization of capital gains,
which are subject to federal income taxes.
Mortgage Pass-Through Certificates. Mortgage pass-through
certificates are issued by governmental, government-related and private
entities and are backed by pools of mortgages (including those on
residential properties and commercial real estate). The mortgage loans are
made by savings and loan institutions, mortgage bankers, commercial banks
and other lenders. The securities are "pass-through" securities because
they provide investors with monthly payments of principal and interest
which, in effect, are a "pass-through" of the monthly payments made by the
individual borrowers on the underlying mortgages, net of any fees paid to
the issuer or guarantor of the pass-through certificates. The principal
governmental issuer of such securities is GNMA, which is a wholly-owned
U.S. Government corporation within the Department of Housing and Urban
Development. Government-related issuers include FHLMC and FNMA, both
government sponsored corporations owned entirely by private stockholders.
Commercial banks, savings and loan institutions, private mortgage
insurance companies, mortgage bankers and other secondary market issuers
also create pass-through pools of conventional residential and commercial
mortgage loans. Such issuers may be the originators of the underlying
mortgage loans as well as the guarantors of the mortgage-related
securities.
(1) GNMA Mortgage Pass-Through Certificates ("Ginnie Maes"). Ginnie
Maes represent an undivided interest in a pool of mortgages that are
insured by the Federal Housing Administration or the Farmers Home
Administration or guaranteed by the Veterans Administration. Ginnie Maes
entitle the holder to receive all payments (including prepayments) of
principal and interest owed by the individual mortgagors, net of fees paid
to GNMA and to the issuer which assembles the mortgage pool and passes
through the monthly mortgage payments to the certificate holders
(typically, a mortgage banking firm), regardless of whether the individual
mortgagor actually makes the payment. Because payments are made to
certificate holders regardless of whether payments are actually received
on the underlying mortgages, Ginnie Maes are of the "modified
pass-through" mortgage certificate type. The GNMA is authorized to
guarantee the timely payment of principal and interest on the Ginnie Maes
as securities backed by an eligible pool of mortgages. The GNMA guarantee
is backed by the full faith and credit of the United States, and the GNMA
has unlimited authority to borrow funds from the U.S. Treasury to make
payments under the guarantee. The market for Ginnie Maes is highly liquid
because of the size of the market and the active participation in the
secondary market of securities dealers and a variety of investors.
(2) FHLMC Mortgage Participation Certificates ("Freddie Macs").
Freddie Macs represent interests in groups of specified first lien
residential conventional mortgages underwritten and owned by the FHLMC.
Freddie Macs entitle the holder to timely payment of interest, which is
guaranteed by the FHLMC. The FHLMC guarantees either ultimate collection
or timely payment of all principal payments on the underlying mortgage
loans. In cases where the FHLMC has not guaranteed timely payment of
principal, the FHLMC may remit the amount due on account of its guarantee
of ultimate payment of principal at any time after default on an
underlying mortgage, but in no event later than one year after it becomes
payable. Freddie Macs are not guaranteed by the United States or by any of
the Federal Home Loan Banks and do not constitute a debt or obligation of
the United States or of any Federal Home Loan Bank. The secondary market
for Freddie Macs is highly liquid because of the size of the market and
the active participation in the secondary market of the FHLMC, securities
dealers and a variety of investors.
(3) FNMA Guaranteed Mortgage Pass-Through Certificates ("Fannie
Maes"). Fannie Maes represent an undivided interest in a pool of
conventional mortgage loans secured by first mortgages or deeds of trust,
on one family, or two to four family, residential properties. The FNMA is
obligated to distribute scheduled monthly installments of principal and
interest on the mortgages in the pool, whether or not received, plus full
principal of any foreclosed or otherwise liquidated mortgages. The
obligation of the FNMA under its guaranty is solely the obligation of the
FNMA and is not backed by, nor entitled to, the full faith and credit of
the United States.
(4) Private issuer mortgage certificates are pass-through securities
structured in a similar fashion to GNMA, FNMA and FHLMC certificates.
Private issuer mortgage certificates are generally backed by conventional
single family, multi-family and commercial mortgages. Private issuer
mortgage certificates typically are not guaranteed by the U.S. Government,
its agencies or instrumentalities, but generally have some form of credit
support in the form of over-collateralization, pool insurance or other
form of credit enhancement.
The market value of mortgage-related securities depends on, among
other things, the level of interest rates, the certificates' coupon rates
and the payment history of the mortgagors of the underlying mortgages.
Municipal Bonds and Other Municipal Obligations. The Fund limits its
investments in municipal obligations to those obligations the interest on
which is subject to federal income tax.
Municipal Bonds. Municipal bonds, which generally have a maturity of
more than one year when issued, have two principal classifications:
general obligation bonds and revenue bonds. A private activity bond is a
particular kind of revenue bond. The classification of general obligation
bonds, revenue bonds and private activity bonds are discussed below.
(1) General Obligation Bonds. The proceeds of these obligations are
used to finance a wide range of public projects, including construction or
improvement of schools, highways and roads, and water and sewer systems.
General obligation bonds are secured by the issuer's pledge of its faith,
credit and taxing power for the payment of principal and interest.
(2) Revenue Bonds. Revenue bonds are issued to finance a wide
variety of capital projects including: electric, gas, water and sewer
systems; highways, bridges and tunnels; port and airport facilities;
colleges and universities; and hospitals. The principal security for a
revenue bond is generally the net revenues derived from a particular
facility, group of facilities or, in some cases, the proceeds of a special
excise or other specific revenue source. Although the principal security
behind these bonds may vary, many provide additional security in the form
of a debt service reserve fund whose money may be used to make principal
and interest payments on the issuer's obligations. Some authorities
provide further security in the form of a state's ability (without
obligation) to make up deficiencies in the debt service reserve fund.
(3) Private Activity Bonds. Private activity bonds are issued by or
on behalf of public authorities to raise money to finance various
privately operated facilities for business and manufacturing, housing,
sports and pollution control. These bonds are also used to finance public
facilities such as airports, mass transit systems, ports and parking. The
payment of the principal and interest on such bonds is dependent solely on
the ability of the facility's user to meet its financial obligations and
the pledge, if any, of real and personal property so financed as security
for such payment.
Municipal Notes. Municipal notes generally are used to provide for
short-term capital needs and generally have maturities of thirteen months
or less. Municipal notes include:
(1) Tax Anticipation Notes. Tax anticipation notes are issued to
finance working capital needs of municipalities. Generally, they are
issued in anticipation of various seasonal tax revenue, such as income,
sales, use and business taxes, and are payable from these specific future
taxes.
(2) Revenue Anticipation Notes. Revenue anticipation notes are
issued in expectation of receipt of other kinds of revenue, such as
Federal revenues available under the Federal Revenue Sharing Programs.
(3) Bond Anticipation Notes. Bond anticipation notes are issued to
provide interim financing until long-term financing can be arranged. In
most cases, the long-term bonds then provide the money for the repayment
of the notes.
Municipal Commercial Paper. Issues of municipal commercial paper
typically represent short-term, unsecured, negotiable promissory notes.
These obligations are issued by agencies of state and local governments to
finance seasonal working capital needs of municipalities or to provide
interim construction financing and are paid from general revenues of
municipalities or are refinanced with long-term debt. In most cases,
municipal commercial paper is backed by letters of credit, lending
agreements, note repurchase agreements or other credit facility agreements
offered by banks or other institutions.
Convertible Securities. The Fund may purchase convertible
securities, which are fixed-income securities such as bonds or preferred
stock that may be converted into or exchanged for a specified number of
shares of common stock of the same or a different issuer within a
specified period of time and at a specified price or formula. Convertible
securities are senior to common stock in a corporation's capital
structure, but may be subordinated to non-convertible debt securities.
Before conversion, convertible securities ordinarily provide a stable
stream of income with yields generally higher than those on common stock,
but lower than those on non-convertible debt securities of similar
quality. In general, the market value of a convertible security is the
higher of its "investment value" (i.e., its value as a fixed-income
security) or its "conversion value" (i.e., the value of the underlying
shares of common stock if the security is converted). As a fixed-income
security, the market value of a convertible security generally increases
when interest rates decline and generally decreases when interest rates
rise. However, the price of a convertible security also is influenced by
the market value of the security's underlying common stock. Thus, the
price of a convertible security generally increases as the market value of
the underlying stock rises, and generally decreases as the market value of
the underlying stock declines. Investments in convertible securities
generally entail less risk than investments in the common stock of the
same issuer. The Fund does not intend to exercise conversion rights for
any convertible security that it may hold and does not intend to hold any
security that has been subject to conversion.
Preferred Stock. The Fund may also purchase preferred stock, which
is a class of capital stock that typically pays dividends at a specified
rate. Preferred stock is generally senior to common stock, but
subordinate to debt securities, with respect to the payment of dividends
and on liquidation of the issuer. In general, the market value of
preferred stock is its "investment value," or its value as a fixed-income
security. Accordingly, the market value of preferred stock generally
increases when interest rates decline and decreases when interest rates
rise, but, as with debt securities, is also affected by the issuer's
ability to make payments on the preferred stock.
Zero Coupon Securities. The Fund may invest in zero coupon
securities, which are debt securities that do not entitle the holder to
any periodic payment of interest, but instead are issued or sold at a
discount from their face value. The amount of the discount varies
depending on, among other factors, prevailing interest rates, the
liquidity of the security, and the perceived creditworthiness of the
issuer. Zero coupon securities may take the form of debt securities that
have been stripped of their unmatured interest coupons, the coupons
themselves and receipts or certificates representing interests in such
stripped debt obligations and coupons. The market prices of zero coupon
securities generally are more volatile than the market prices of
securities that pay interest periodically and are likely to respond to a
greater degree to changes in interest rates than non-zero coupon
securities having similar maturities and credit qualities.
Illiquid Investments. Over-the-counter ("OTC") options purchased by
the Fund will be considered illiquid for purposes of the Fund's operating
policy that provides that it may not invest more than 15% of its net
assets in illiquid investments. When the Fund sells OTC options, it will
segregate assets or cover its obligations with respect to OTC options
written by it. The assets used as cover for OTC options written by the
Fund will also be considered illiquid investments for purposes of this
limitation unless the OTC options are sold to qualified dealers who agree
that the Fund may repurchase any OTC option it writes at a maximum price
to be calculated by a formula set forth in the option agreement. The
cover for an OTC option written subject to this procedure would be
considered illiquid only to the extent that the maximum repurchase price
under the formula exceeds the intrinsic value of the option.
Under current guidelines of the staff of the SEC, IOs and POs are
also considered to be illiquid; however, IO and PO classes of fixed-rate
mortgage-related securities issued by the U.S. Government or one of its
agencies or instrumentalities will not be considered illiquid if Dreyfus
determines that they are liquid pursuant to guidelines established by or
under the direction of the Company's Board of Directors.
The Fund may invest in commercial obligations issued in reliance on
the so-called "private placement" exemption from registration afforded by
Section 4(2) of the Securities Act of 1933, as amended ("Section 4(2)
paper"). The Fund may also purchase securities that are not registered
under the Securities Act of 1933, as amended, but that can be sold to
qualified institutional buyers in accordance with Rule 144A under that Act
("Rule 144A securities"). Liquidity determinations with respect to
Section 4(2) paper and Rule 144A securities will be made by the Board of
Directors or by Dreyfus pursuant to guidelines established by the Board of
Directors. The Board or Dreyfus will consider availability of reliable
price information and other relevant information in making such
determinations. Section 4(2) paper is restricted as to disposition under
the federal securities laws, and generally is sold to institutional
investors, such as the Fund, that agree that they are purchasing the paper
for investment and not with a view to public distribution. Any resale by
the purchaser must be pursuant to registration or an exemption therefrom.
Section 4(2) paper normally is resold to other institutional investors
like the Fund through or with the assistance of the issuer or investment
dealers who make a market in the Section 4(2) paper, thus providing
liquidity. Rule 144A securities generally must be sold to other qualified
institutional buyers. If a particular investment in Section 4(2) paper or
Rule 144A securities is not determined to be liquid, that investment will
be included within the percentage limitation on investment in illiquid
securities. The ability to sell Rule 144A securities to qualified
institutional buyers is a recent development and it is not possible to
predict how this market will mature. Investing in Rule 144A securities
could have the effect of increasing the level of Fund illiquidity to the
extent that qualified institutional buyers become, for a time,
uninterested in purchasing these securities from a Fund or other holder.
The Fund does not currently intend to invest in Section 4(2) paper or Rule
144A securities.
Management Policies
The Fund engages, except as noted, in the following practices in
furtherance of its investment objective.
Derivative Instruments.
General. As discussed in the Prospectus, the Fund may purchase and
sell various financial instruments ("Derivative Instruments"), such as
financial futures contracts (including interest rate, index and foreign
currency futures contracts), options (including options on securities,
indices, foreign currencies and futures contracts), forward currency
contracts, and interest rate and currency swaps, caps, collars and floors.
The index Derivative Instruments the Fund may use may be based on indices
of U.S. or foreign equity or debt securities. These Derivative
Instruments may be used, for example, to preserve a return or spread, to
lock in unrealized market value gains or losses, to facilitate or
substitute for the sale or purchase of securities, to manage the duration
of securities, to alter the exposure of a particular investment or portion
of the Fund's portfolio to fluctuations in interest rates or currency
rates, to uncap a capped security or to convert a fixed rate security into
a variable rate security or a variable rate security into a fixed rate
security.
Hedging strategies can be broadly categorized as "short hedges" and
"long hedges." A short hedge is a purchase or sale of a Derivative
Instrument intended partially or fully to offset potential declines in the
value of one or more investments held in the Fund's portfolio. Thus, in a
short hedge the Fund takes a position in a Derivative Instrument whose
price is expected to move in the opposite direction of the price of the
investment being hedged.
Conversely, a long hedge is a purchase or sale of a Derivative
Instrument intended partially or fully to offset potential increases in
the acquisition cost of one or more investments that the Fund intends to
acquire. Thus, in a long hedge the Fund takes a position in a Derivative
Instrument whose price is expected to move in the same direction as the
price of the prospective investment being hedged. A long hedge is
sometimes referred to as an anticipatory hedge. In an anticipatory hedge
transaction, the Fund does not own a corresponding security and,
therefore, the transaction does not relate to a security the Fund owns.
Rather, it relates to a security that the Fund intends to acquire. If the
Fund does not complete the hedge by purchasing the security it anticipated
purchasing, the effect on the Fund's portfolio is the same as if the
transaction were entered into for speculative purposes.
Derivative Instruments on securities generally are used to hedge
against price movements in one or more particular securities positions
that the Fund owns or intends to acquire. Derivative Instruments on
indices, in contrast, generally are used to attempt to hedge against price
movements in market sectors in which the Fund has invested or expects to
invest. Derivative Instruments on debt securities may be used to hedge
either individual securities or broad debt market sectors.
The use of Derivative Instruments is subject to applicable
regulations of the Securities and Exchange Commission ("SEC"), the several
options and futures exchanges upon which they are traded, the Commodity
Futures Trading Commission ("CFTC") and various state regulatory
authorities. In addition, the Fund's ability to use Derivative
Instruments will be limited by tax considerations. See "Dividends, Other
Distributions and Taxes."
In addition to the instruments, strategies and risks described below
and in the Prospectus, Dreyfus expects to discover additional
opportunities in connection with other Derivative Instruments. These new
opportunities may become available as Dreyfus develops new techniques, as
regulatory authorities broaden the range of permitted transactions and as
new techniques are developed. Dreyfus may utilize these opportunities to
the extent that they are consistent with the Fund's investment objective,
and permitted by the Fund's investment policies and applicable regulatory
authorities. The Fund's Prospectus or Statement of Additional Information
will be supplemented to the extent that new products or techniques involve
materially different risks than those described below or in the
Prospectus.
Special Risks. The use of Derivative Instruments involves special
considerations and risks, certain of which are described below. Risks
pertaining to particular Derivative Instruments are described in the
sections that follow.
(1) Successful use of most Derivative Instruments depends upon
Dreyfus' ability to predict movements of the overall securities, currency
and interest rate markets, which requires different skills than predicting
changes in the prices of individual securities. There can be no assurance
that any particular strategy will succeed.
(2) There might be imperfect correlation, or even no correlation,
between price movements of a Derivative Instrument and price movements of
the investments being hedged. For example, if the value of a Derivative
Instrument used in a short hedge increased by less than the decline in
value of the hedged investment, the hedge would not be fully successful.
Such a lack of correlation might occur due to factors unrelated to the
value of the investments being hedged, such as speculative or other
pressures on the markets in which Derivative Instruments are traded. The
effectiveness of hedges using Derivative Instruments on indices will
depend on the degree of correlation between price movements in the index
and price movements in the securities being hedged.
Because there are a limited number of types of exchange-traded
options and futures contracts, it is likely that the standardized
contracts available will not match the Fund's current or anticipated
investments exactly. The Fund may invest in options and futures contracts
based on securities with different issuers, maturities, or other
characteristics from the securities in which it typically invests, which
involves a risk that the options or futures position will not track the
performance of the Fund's other investments.
Options and futures prices can also diverge from the prices of their
underlying instruments, even if the underlying instruments match the
Fund's investments well. Options and futures prices are affected by such
factors as current and anticipated short-term interest rates, changes in
volatility of the underlying instrument, and the time remaining until
expiration of the contract, which may not affect security prices the same
way. Imperfect correlation may also result from differing levels of
demand in the options and futures markets and the securities markets, from
structural differences in how options and futures and securities are
traded, or from imposition of daily price fluctuation limits or trading
halts. The Fund may purchase or sell options and futures contracts with a
greater or lesser value than the securities it wishes to hedge or intends
to purchase in order to attempt to compensate for differences in
volatility between the contract and the securities, although this may not
be successful in all cases. If price changes in the Fund's options or
futures positions are poorly correlated with its other investments, the
positions may fail to produce anticipated gains or result in losses that
are not offset by gains in other investments.
(3) If successful, the above-discussed strategies can reduce risk of
loss by wholly or partially offsetting the negative effect of unfavorable
price movements. However, such strategies can also reduce opportunity for
gain by offsetting the positive effect of favorable price movements. For
example, if the Fund entered into a short hedge because Dreyfus projected
a decline in the price of a security in the Fund's portfolio, and the
price of that security increased instead, the gain from that increase
might be wholly or partially offset by a decline in the price of the
Derivative Instrument. Moreover, if the price of the Derivative
Instrument declined by more than the increase in the price of the
security, the Fund could suffer a loss. In either such case, the Fund
would have been in a better position had it not attempted to hedge at all.
(4) As described below, the Fund might be required to maintain
assets as "cover," maintain segregated accounts or make margin payments
when it takes positions in Derivative Instruments involving obligations to
third parties (i.e., Derivative Instruments other than purchased options).
If the Fund were unable to close out its positions in such Derivative
Instruments, it might be required to continue to maintain such assets or
accounts or make such payments until the position expired or matured.
These requirements might impair the Fund's ability to sell a portfolio
security or make an investment at a time when it would otherwise be
favorable to do so, or require that the Fund sell a portfolio security at
a disadvantageous time. The Fund's ability to close out a position in a
Derivative Instrument prior to expiration or maturity depends on the
existence of a liquid secondary market or, in the absence of such a
market, the ability and willingness of the other party to the transaction
("contra party") to enter into a transaction closing out the position.
Therefore, there is no assurance that any position can be closed out at a
time and price that is favorable to the Fund.
Cover for Derivative Instruments. Transactions using Derivative
Instruments may expose the Fund to an obligation to another party. The
Fund will not enter into any such transactions unless it owns either (1)
an offsetting ("covered") position in securities, futures, options,
currencies or forward contracts or (2) cash and short-term liquid debt
securities with a value sufficient at all times to cover its potential
obligations to the extent not covered as provided in (1) above. The Fund
will comply with SEC guidelines regarding cover for Derivative Instruments
and will, if the guidelines so require, set aside cash, U.S. Government
securities or other liquid, high-grade debt securities in a segregated
account with its custodian in the prescribed amount.
Assets used as cover or held in a segregated account cannot be sold
while the position in the corresponding Derivative Instrument is open,
unless they are replaced with other appropriate assets. As a result, the
commitment of a large portion of the Fund's assets to cover or segregated
accounts could impede portfolio management or the Fund's ability to meet
redemption requests or other current obligations.
Options. A call option gives the purchaser the right to buy, and
obligates the writer to sell, the underlying investment at the agreed upon
exercise price during the option period. A put option gives the purchaser
the right to sell, and obligates the writer to buy, the underlying
investment at the agreed upon exercise price during the option period. A
purchaser of an option pays an amount, known as the premium, to the option
writer in exchange for rights under the option contract.
Options on indices are similar to options on securities or currencies
except that all settlements are in cash and gain or loss depends on
changes in the index in question rather than on price movements in
individual securities or currencies.
The purchase of call options can serve as a long hedge, and the
purchase of put options can serve as a short hedge. Writing put or call
options can enable the Fund to enhance income or yield by reason of the
premiums paid by the purchasers of such options. However, if the market
price of the security or other instrument underlying a put option declines
to less than the exercise price on the option, minus the premium received,
the Fund would expect to suffer a loss.
Writing call options can also serve as a limited short hedge because
declines in the value of the hedged investment would be offset to the
extent of the premium received for writing the option. However, if the
investment appreciates to a price higher than the exercise price of the
call option, it can be expected that the option will be exercised and the
Fund will be obligated to sell the investment at less than its market
value.
Writing put options can serve as a limited long hedge because
increases in the value of the hedged investment would be offset to the
extent of the premium received for writing the option. However, if the
investment depreciates to a price lower than the exercise price of the put
option, it can be expected that the put option will be exercised and the
Fund will be obligated to purchase the investment at more than its market
value.
The value of an option position will reflect, among other things, the
current market value of the underlying investment, the time remaining
until expiration, the relationship of the exercise price to the market
price of the underlying investment, the historical price volatility of the
underlying investment and general market conditions. Options that expire
unexercised have no value.
The Fund may effectively terminate its right or obligation under an
option by entering into a closing transaction. For example, the Fund may
terminate its obligation under a call or put option that it had written by
purchasing an identical call or put option; this is known as a closing
purchase transaction. Conversely, the Fund may terminate a position in a
put or call option it had purchased by writing an identical put or call
option; this is known as a closing sale transaction. Closing transactions
permit the Fund to realize profits or limit losses on an option position
prior to its exercise or expiration.
The Fund may purchase and sell both exchange-traded and OTC options.
Exchange-traded options in the United States are issued by a clearing
organization that, in effect, guarantees completion of every exchange-
traded option transaction. In contrast, OTC options are contracts between
the Fund and its contra party (usually a securities dealer or a bank) with
no clearing organization guarantee. Thus, when the Fund purchases an OTC
option, it relies on the contra party from whom it purchased the option to
make or take delivery of the underlying investment upon exercise of the
option. Failure by the contra party to do so would result in the loss of
any premium paid by the Fund as well as the loss of any expected benefit
of the transaction.
The Fund will enter into only those option contracts that are listed
on a national securities or commodities exchange or traded in the OTC
market for which there appears to be a liquid secondary market.
The Fund will not purchase or write OTC options if, as a result of
such transaction, the sum of (i) the market value of outstanding OTC
options purchased by the Fund, (ii) the market value of the underlying
securities covered by outstanding OTC call options written by the Fund,
and (iii) the market value of all other assets of the Fund that are
illiquid or are not otherwise readily marketable, would exceed 15% of the
net assets of the Fund, taken at market value. However, if an OTC option
is sold by the Fund to a primary U.S. Government securities dealer
recognized by the Federal Reserve Bank of New York and the Fund has the
unconditional contractual right to repurchase such OTC option from the
dealer at a predetermined price, then the Fund will treat as illiquid such
amount of the underlying securities as is equal to the repurchase price
less the amount by which the option is "in-the-money" (the difference
between the current market value of the underlying securities and the
option's strike price). The repurchase price with primary dealers is
typically a formula price that is generally based on a multiple of the
premium received for the option plus the amount by which the option is
"in-the-money."
Generally, the OTC debt and foreign currency options used by the Fund
are European-style options. This means that the option is only
exercisable immediately prior to its expiration. This is in contrast to
American-style options, which are exercisable at any time prior to the
expiration date of the option.
The Fund's ability to establish and close out positions in exchange-
listed options depends on the existence of a liquid market. However,
there can be no assurance that such a market will exist at any particular
time. Closing transactions can be made for OTC options only by
negotiating directly with the contra party, or by a transaction in the
secondary market if any such market exists. Although the Fund will enter
into OTC options only with major dealers in unlisted options, there is no
assurance that the Fund will in fact be able to close out an OTC option
position at a favorable price prior to expiration. In the event of
insolvency of the contra party, the Fund might be unable to close out an
OTC option position at any time prior to its expiration.
If the Fund were unable to effect a closing transaction for an option
it had purchased, it would have to exercise the option to realize any
profit. The inability to enter into a closing purchase transaction for a
covered call option written by the Fund could cause material losses
because the Fund would be unable to sell the investment used as cover for
the written option until the option expires or is exercised.
The Fund may write only covered call options on securities. A call
option is covered if the Fund owns the underlying security or a call
option on the same security with a lower strike price.
Futures Contracts and Options on Futures Contracts. When the Fund
purchases a futures contract, it incurs an obligation to take delivery of
a specified amount of the obligation underlying the futures contract at a
specified time in the future for a specified price. When the Fund sells a
futures contract, it incurs an obligation to deliver a specified amount of
the obligation underlying the futures contract at a specified time in the
future for an agreed upon price. With respect to index futures, no
physical transfer of the securities underlying the index is made. Rather,
the parties settle by exchanging in cash an amount based on the difference
between the contract price and the closing value of the index on the
settlement date.
When the Fund writes an option on a futures contract, it becomes
obligated, in return for the premium paid, to assume a position in a
futures contract at a specified exercise price at any time during the term
of the option. If the Fund has written a call, it assumes a short futures
position. If the Fund has written a put, it assumes a long futures
position. When the Fund purchases an option on a futures contract, it
acquires the right, in return for the premium it pays, to assume a
position in a futures contract (a long position if the option is a call
and a short position if the option is a put).
The purchase of futures or call options on futures can serve as a
long hedge, and the sale of futures or the purchase of put options on
futures can serve as a short hedge. Writing call options on futures
contracts can serve as a limited short hedge, using a strategy similar to
that used for writing call options on securities or indices. Similarly,
writing put options on futures contracts can serve as a limited long
hedge.
Futures strategies also can be used to manage the average duration of
the Fund's fixed-income portfolio. If Dreyfus wishes to shorten the
average duration of the Fund's fixed-income portfolio, the Fund may sell
an interest rate futures contract or a call option thereon, or purchase a
put option on that futures contract. If Dreyfus wishes to lengthen the
average duration of the Fund's fixed-income portfolio, the Fund may buy an
interest rate futures contract or a call option thereon, or sell a put
option thereon.
No price is paid upon entering into a futures contract. Instead, at
the inception of a futures contract the Fund is required to deposit
"initial margin" consisting of cash or U.S. Government securities in an
amount generally equal to 10% or less of the contract value. Margin must
also be deposited when writing a call or put option on a futures contract,
in accordance with applicable exchange rules. Unlike margin in securities
transactions, initial margin on futures contracts does not represent a
borrowing, but rather is in the nature of a performance bond or good-faith
deposit that is returned to the Fund at the termination of the transaction
if all contractual obligations have been satisfied. Under certain
circumstances, such as periods of high volatility, the Fund may be
required by an exchange to increase the level of its initial margin
payment.
Subsequent "variation margin" payments are made to and from the
futures broker daily as the value of the futures position varies, a
process known as "marking-to-market." Variation margin does not involve
borrowing, but rather represents a daily settlement of the Fund's
obligations to or from a futures broker. When the Fund purchases an
option on a future, the premium paid plus transaction costs is all that is
at risk. In contrast, when the Fund purchases or sells a futures contract
or writes a call or put option thereon, it is subject to daily variation
margin calls that could be substantial in the event of adverse price
movements. If the Fund has insufficient cash to meet daily variation
margin requirements, it might need to sell securities at a time when such
sales are disadvantageous.
Purchasers and sellers of futures contracts and options on futures
can enter into offsetting closing transactions, similar to closing
transactions on options, by selling or purchasing, respectively, an
instrument identical to the instrument purchased or sold. Positions in
futures and options on futures may be closed only on an exchange or board
of trade that provides a secondary market. Although the Fund intends to
enter into futures and options on futures only on exchanges or boards of
trade where there appears to be a liquid secondary market, there can be no
assurance that such a market will exist for a particular contract at a
particular time. In such event, it may not be possible to close a futures
contract or options position.
Under certain circumstances, futures exchanges may establish daily
limits on the amount that the price of a futures or an option on a futures
contract can vary from the previous day's settlement price; once that
limit is reached, no trades may be made that day at a price beyond the
limit. Daily price limits do not limit potential losses because prices
could move to the daily limit for several consecutive days with little or
no trading, thereby preventing liquidation of unfavorable positions.
If the Fund were unable to liquidate a futures or options on futures
position due to the absence of a liquid secondary market or the imposition
of price limits, it could incur substantial losses. The Fund would
continue to be subject to market risk with respect to the position. In
addition, except in the case of purchased options, the Fund would continue
to be required to make daily variation margin payments and might be
required to maintain the position being hedged by the future or option or
to maintain cash or securities in a segregated account.
To the extent that the Fund enters into futures contracts, options on
futures contracts, or options on foreign currencies traded on an exchange
regulated by the CFTC, in each case other than for bona fide hedging
purposes (as defined by the CFTC), the aggregate initial margin and
premiums required to establish those positions (excluding the amount by
which options are "in-the-money" at the time of purchase) will not exceed
5% of the liquidation value of the Fund's portfolio, after taking into
account unrealized profits and unrealized losses on any contracts the Fund
has entered into. This policy does not limit to 5% the percentage of the
Fund's assets that are at risk in futures contracts and options on futures
contracts.
Foreign Currency Strategies - Special Considerations. The Fund may
use Derivative Instruments on foreign currencies to hedge against
movements in the values of the foreign currencies in which the Fund's
securities are denominated. Such currency hedges can protect against
price movements in a security that the Fund owns or intends to acquire
that are attributable to changes in the value of the currency in which it
is denominated. Such hedges do not, however, protect against price
movements in the securities that are attributable to other causes.
The Fund might seek to hedge against changes in the value of
particular currency when no Derivative Instruments on that currency are
available or such Derivative Instruments are more expensive than certain
other Derivative Instruments. In such cases, the Fund may hedge against
price movements in that currency by entering into transactions using
Derivative Instruments on another currency or a basket of currencies, the
values of which Dreyfus believes will have a high degree of positive
correlation to the value of the currency being hedged. The risk that
movements in the price of the Derivative Instrument will not correlate
perfectly with movements in the price of the currency being hedged is
magnified when this strategy is used.
The value of Derivative Instruments on foreign currencies depends on
the value of the underlying currency relative to the U.S. dollar. Because
foreign currency transactions occurring in the interbank market might
involve substantially larger amounts than those involved in the use of
foreign currency Derivative Instruments, the Fund could be disadvantaged
by having to deal in the odd lot market (generally consisting of
transactions of less than $1 million) for the underlying foreign
currencies at prices that are less favorable than for round lots.
There is no systematic reporting of last sale information for foreign
currencies or any regulatory requirement that quotations available through
dealers or other market sources be firm or revised on a timely basis.
Quotation information generally is representative of very large
transactions in the interbank market and thus might not reflect odd-lot
transactions where rates might be less favorable. The interbank market in
foreign currencies is a global, round-the-clock market.
Settlement of transactions involving foreign currencies might be
required to take place within the country issuing the underlying currency.
Thus, the Fund might be required to accept or make delivery of the
underlying foreign currency in accordance with any U.S. or foreign
regulations regarding the maintenance of foreign banking arrangements by
U.S. residents and might be required to pay any fees, taxes and charges
associated with such delivery assessed in the issuing country.
Forward Contracts. A forward foreign currency exchange contract
("forward contract") is a contract to purchase or sell a currency at a
future date. The two parties to the contract set the number of days and
the price. Forward contracts are used as a hedge against future movements
in foreign exchange rates. The Fund may enter into forward contracts to
purchase or sell foreign currencies for a fixed amount of U.S. dollars or
other foreign currency.
Forward contracts may serve as long hedges -- for example, the Fund
may purchase a forward contract to lock in the U.S. dollar price of a
security denominated in a foreign currency that the Fund intends to
acquire. Forward contracts may also serve as short hedges -- for example,
the Fund may sell a forward contract to lock in the U.S. dollar equivalent
of the proceeds from the anticipated sale of a security denominated in a
foreign currency or from anticipated dividend or interest payments
denominated in a foreign currency. Dreyfus may seek to hedge against
changes in the value of a particular currency by using forward contracts
on another foreign currency or basket of currencies, the value of which
Dreyfus believes will bear a positive correlation to the value of the
currency being hedged.
The cost to the Fund of engaging in forward contracts varies with
factors such as the currency involved, the length of the contract period
and the market conditions then prevailing. Because forward contracts are
usually entered into a principal basis, no fees or commissions are
involved. When the Fund enters into a forward contract, it relies on the
contra party to make or take delivery of the underlying currency at the
maturity of the contract. Failure by the contra party to do so would
result in the loss of any expected benefit of the transaction.
Buyers and sellers of forward contracts can enter into offsetting
closing transactions by selling or purchasing, respectively, an instrument
identical to the instrument purchased or sold. Secondary markets
generally do not exist for forward contracts, with the result that closing
transactions generally can be made for forward contracts only by
negotiating directly with the contra party. Thus, there can be no
assurance that the Fund will in fact be able to close out a forward
contract at a favorable price prior to maturity. In addition, in the
event of insolvency of the contra party, the Fund might be unable to close
out a forward contract at any time prior to maturity. In either event,
the Fund would continue to be subject to market risk with respect to the
position, and would continue to be required to maintain a position in the
securities or currencies that are the subject of the hedge or to maintain
cash or securities in a segregated account.
The precise matching of forward currency contract amounts and the
value of the securities involved generally will not be possible because
the value of such securities measured in the foreign currency will change
after the forward contract has been established. Thus, the Fund might
need to purchase or sell foreign currencies in the spot (cash) market to
the extent such foreign currencies are not covered by forward contracts.
The projection of short-term currency market movements is extremely
difficult, and the successful execution of a short-term hedging strategy
is highly uncertain.
Swaps, Caps, Collars and Floors. Swap agreements, including interest
rate and currency swaps, caps, collars and floors, may be individually
negotiated and structured to include exposure to a variety of different
types of investments or market factors. Swaps involve two parties
exchanging a series of cash flows at specified intervals. In the case of
an interest rate swap, the parties exchange interest payments based on an
agreed upon principal amount (referred to as the "notional principal
amount"). Under the most basic scenario, Party A would pay a fixed rate
on the notional principal amount to Party B, which would pay a floating
rate on the same notional principal amount to Party A. Depending on their
structure, swap agreements may increase or decrease the Fund's exposure to
long or short-term interest rates (in the U.S. or abroad), foreign
currency values, mortgage securities, corporate borrowing rates, or other
factors. Swap agreements can take many different forms and are known by a
variety of names.
In a typical cap or floor agreement, one party agrees to make
payments only under specified circumstances, usually in return for payment
of a fee by the other party. For example, the buyer of an interest rate
cap obtains the right to receive payments to the extent that a specified
interest rate exceeds an agreed-upon level, while the seller of an
interest rate floor is obligated to make payments to the extent that a
specified interest rate falls below an agreed-upon level. An interest
rate collar combines elements of buying a cap and selling a floor.
The Fund will set aside cash or appropriate liquid assets to cover
its current obligations under swap transactions. If the Fund enters into
a swap agreement on a net basis (that is, the two payment streams are
netted out, with the Fund receiving or paying, as the case may be, only
the net amount of the two payments), the Fund will maintain cash or liquid
assets with a daily value at least equal to the excess, if any, of the
Fund's accrued obligations under the swap agreement over the accrued
amount the Fund is entitled to receive under the agreement. If the Fund
enters into a swap agreement on other than a net basis or writes a cap,
collar or floor, it will maintain cash or liquid assets with a value equal
to the full amount of the Fund's accrued obligations under the agreement.
The most important factor in the performance of swap agreements is
the change in the specific interest rate, currency or other factor(s) that
determine the amounts of payments due to and from the Fund. If a swap
agreement calls for payments by the Fund, the Fund must be prepared to
make such payments when due. In addition, if the contra party's
creditworthiness declines, the value of a swap agreement would likely
decline, potentially resulting in losses.
The Fund will enter into swaps, caps, collars and floors only with
banks and recognized securities dealers believed by Dreyfus to present
minimal credit risks in accordance with guidelines established by the
Board. If there is a default by the other party to such a transaction,
the Fund will have to rely on its contractual remedies (which may be
limited by bankruptcy, insolvency or similar laws) pursuant to the
agreement relating to the transaction.
The Fund understands that it is the position of the staff of the SEC
that assets involved in swap transactions are illiquid and, therefore, are
subject to the limitations on illiquid investments. See "Illiquid
Investments."
Investment Restrictions
The following limitations have been adopted by the Fund. The Fund may
not change any of these fundamental investment limitations without the
consent of: (a) 67% or more of the shares present at a meeting of
shareholders duly called if the holders of more than 50% of the
outstanding shares of the Fund are present or represented by proxy, or (b)
more than 50% of the outstanding shares of the Fund, whichever is less.
The Fund may not:
1. Purchase any securities which would cause more than 25% of the
value of the Fund's total assets at the time of such purchase to be
invested in the securities of one or more issuers conducting their
principal activities in the same industry. (For purposes of this
limitation, U.S. Government securities, and state or municipal governments
and their political subdivisions are not considered members of any
industry.)
2. Borrow money or issue senior securities as defined in the
Investment Company Act of 1940, as amended ("1940 Act"), except that (a)
the Fund may borrow money in an amount not exceeding one-third of the
Fund's total assets at the time of such borrowings, and (b) the Fund may
issue multiple classes of shares. The purchase or sale of futures
contracts, options, forward contracts, swaps, caps, collars and floors
shall not be considered to involve the borrowing of money or issuance of
senior securities.
3. Purchase with respect to 75% of the Fund's total assets
securities of any one issuer (other than securities issued or guaranteed
by the U.S. Government, its agencies or instrumentalities) if, as a
result, (a) more than 5% of the Fund's total assets would be invested in
the securities of that issuer, or (b) the Fund would hold more than 10% of
the outstanding voting securities of that issuer.
4. Make loans or lend securities, if as a result thereof more than
one-third of the Fund's total assets would be subject to all such loans.
For purposes of this limitation debt instruments, swaps, caps, collars,
floors, and repurchase agreements shall not be treated as loans.
5. Purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent
the Fund from investing in securities or other instruments backed by real
estate, including mortgage loans, or securities of companies that engage
in real estate business or invest or deal in real estate or interests
therein).
6. Underwrite securities issued by any other person, except to the
extent that the purchase of securities and later disposition of such
securities in accordance with the Fund's investment program may be deemed
an underwriting.
7. Purchase or sell commodities, except that the Fund may purchase
and sell foreign currency, futures contracts, options, forward currency
contracts, swaps, caps, collars and floors, and other similar instruments.
The Fund may, notwithstanding any other fundamental investment policy
or limitation, invest all of its investable assets in securities of a
single open-end management investment company with substantially the same
investment objective, policies and limitations as the Fund.
The Fund has adopted the following additional non-fundamental
restrictions. These non-fundamental restrictions may be changed without
shareholder approval, in compliance with applicable law and regulatory
policy.
1. The Fund shall not sell securities short, unless it owns or has
the right to obtain securities equivalent in kind and amounts to the
securities sold short, and provided that transactions in futures
contracts, options, forward contracts, swaps, caps, collars, floors, and
other similar financial instruments are not deemed to constitute selling
short.
2. The Fund shall not purchase securities on margin, except that
the Fund may obtain such short-term credits as are necessary for the
clearance of transactions, and provided that margin payments in connection
with futures contracts, options, forward contracts, swaps, caps, collars,
floors, and other similar financial instruments shall not constitute
purchasing securities on margin.
3. The Fund shall not purchase oil, gas or mineral leases.
4. The Fund will not purchase or retain the securities of any
issuer if the officers, Directors of the Fund, its advisers, or managers,
owning beneficially more than one half of 1% of the securities of such
issuer, together own beneficially more than 5% of such securities.
5. The Fund will not purchase securities of issuers (other than
securities issued or guaranteed by domestic or foreign governments or
political subdivisions thereof), including their predecessors, that have
been in operation for less than three years, if by reason thereof, the
value of the Fund's investment in securities would exceed 5% of the Fund's
total assets. For purposes of this limitation, sponsors, general partners,
guarantors and originators of underlying assets may be treated as the
issuer of a security.
6. The Fund will not invest more than 15% of the value of its net
assets in illiquid securities, including repurchase agreements with
remaining maturities in excess of seven days, time deposits with
maturities in excess of seven days and other securities which are not
readily marketable. For purposes of this limitation, illiquid securities
shall not include interest-only (IO) and principal-only (PO) classes of
fixed-rate mortgage-related securities issued by the U.S. Government or
one of its agencies or instrumentalities; provided, that the Board of
Directors, or its delegate, determines that such securities are liquid
pursuant to guidelines established by or under the direction of the Board
of Directors. Also, for purposes of this limitation, illiquid securities
shall not include Section 4(2) paper, or securities that may be resold
under Rule 144A under the Securities Act of 1933; provided, that the Board
of Directors, or its delegate, determines that such securities are liquid
based upon the trading markets for the specific security.
7. The Fund may not invest in securities of other investment
companies, except as they may be acquired as part of a merger,
consolidation or acquisition of assets and except to the extent otherwise
permitted by the 1940 Act.
8. The Fund shall not purchase any security while borrowings
representing more than 5% of the Fund's total assets are outstanding.
9. The Fund will not purchase warrants if at the time of such
purchase: (a) more than 5% of the value of the Fund's assets would be
invested in warrants, or (b) more than 2% of the value of the Fund's
assets would be invested in warrants that are not listed on the New York
or American Stock Exchange (for purposes of this limitation, warrants
acquired by the Fund in units or attached to securities will be deemed to
have no value).
10. The Fund will not purchase puts, calls, straddles, spreads and
any combination thereof if, as a result of such purchase, the value of its
aggregate investment in such securities will exceed 5% of its total
assets, except that: (a) this limitation shall not apply to standby
commitments, and (b) this limitation shall not apply to the Fund's
transactions in futures contracts and options on futures contracts.
To the extent that the Fund enters into futures contracts, options on
futures contracts, or options on foreign currencies traded on an exchange
regulated by the CFTC, in each case other than for bona fide hedging
purposes (as defined by the CFTC), the aggregate initial margin and
premiums required to establish those positions (excluding the amount by
which options are "in-the-money" at the time of purchase) will not exceed
5% of the liquidation value of the Fund's portfolio, after taking into
account unrealized profits and unrealized losses on any contracts the Fund
has entered into. This policy does not limit to 5% the percentage of the
Fund's assets that are at risk in futures contracts and options on futures
contracts.
MANAGEMENT OF THE FUND
PRINCIPAL SHAREHOLDERS
The following shareholder(s) owned of record 5% or more of the
Investor shares of the Fund at June 6, 1996: Allomon Corporation, One
Mellon Bank Circle 151-657, Pittsburgh PA 15258, 87% record.
The following shareholders(s) owned of record 5% or more of the Class
R shares of the Fund at June 6, 1996: Boston & Company P.O. Box 3198,
Pittsburgh, PA 15230-3198, 6% record.
FEDERAL LAW AFFECTING MELLON BANK
The Glass-Steagall Act of 1933 prohibits national banks from engaging
in the business of underwriting, selling or distributing securities and
prohibits a member bank of the Federal Reserve System from having certain
affiliations with an entity engaged principally in that business. The
activities of Mellon Bank, N.A. ("Mellon Bank") in informing its customers
of, and performing, investment and redemption services in connection with
the Fund, and in providing services to the Fund as custodian, as well as
Dreyfus' investment advisory activities, may raise issues under these
provisions. Mellon Bank has been advised by counsel that the activities
contemplated under these arrangements are consistent with its statutory
and regulatory obligations.
Changes in either federal or state statutes and regulations relating
to the permissible activities of banks and their subsidiaries or
affiliates, as well as further judicial or administrative decisions or
interpretations of such future statutes and regulations, could prevent
Mellon Bank or Dreyfus from continuing to perform all or a part of the
above services for its customers and/or the Fund. If Mellon Bank or
Dreyfus was prohibited from serving the Fund in any of its present
capacities, the Board of Directors would seek an alternative provider(s)
of such services.
DIRECTORS AND OFFICERS
The Company has a Board composed of twelve Directors which supervises
the Fund's investment activities and reviews contractual arrangements with
companies that provide the Fund with services. The following lists the
Directors and officers and their positions with the Company and their
present and principal occupations during the past five years. Each
Director who is an "interested person" of the Company (as defined in the
1940 Act) is indicated by an asterisk(*). Each of the Directors also
serves as a Trustee of The Dreyfus/Laurel Funds Trust and The
Dreyfus/Laurel Tax-Free Municipal Funds (collectively, with the Company,
the "Dreyfus/Laurel Funds") and Mr. DiMartino serves as a Board member for
93 other funds advised by Dreyfus.
o+RUTH MARIE ADAMS. Director of the Company; Professor of English and
Vice President Emeritus, Dartmouth College; Senator, United Chapters
of Phi Beta Kappa; Trustee, Woods Hole Oceanographic Institution.
Age: 81 years old. Address: 1026 Kendal, Lyme Road, Hanover, New
Hampshire 03755.
o+FRANCIS P. BRENNAN. Chairman of the Board of Directors and Assistant
Treasurer of the Company; Director and Chairman, Massachusetts
Business Development Corp.; Age: 79 years old. Address:
Massachusetts Business Development Corp., One Liberty Square, Boston,
Massachusetts 02109.
o*JOSEPH S. DiMARTINO. Director of the Company since February 1995.
Since January 1995, Mr. DiMartino has served as Chairman of the Board
for various funds in the Dreyfus Family of Funds. For more than five
years prior thereto, he was President and a director of Dreyfus and
Executive Vice President and a director of Dreyfus Service
Corporation, a wholly-owned subsidiary of Dreyfus and until August
24, 1994, the Fund's distributor. From August 1994 to December 31,
1994, he was a director of Mellon Bank Corporation. He is Chairman
of the Board of Noel Group, Inc., a venture capital company; a
trustee of Bucknell University; and a director of the Muscular
Dystrophy Association, HealthPlan Services Corporation, Belding
Heminway, Inc., Curtis Industries, Inc., Simmons Outdoor Corporation,
and Staffing Resources, Inc. Age: 52 years old. Address: 200 Park
Avenue, New York, New York 10166.
o+JAMES M. FITZGIBBONS. Director of the Company; Chairman, Howes Leather
Company, Inc.; Chairman, CEO and Director, Fieldcrest-Cannon Inc.;
Director, Lumber Mutual Insurance Company; Director, Barrett
Resources, Inc. Age: 61 years old. Address: 40 Norfolk Road,
Brookline, Massachusetts 02167.
o*J. TOMLINSON FORT. Director of the Company; Since 1990, Partner, Reed,
Smith, Shaw & McClay (law firm). Age: 68 years old. Address: 204
Woodcock Drive, Pittsburgh, Pennsylvania 15215.
o+ARTHUR L. GOESCHEL. Director of the Company; Director and Chairman of
the Board, Rexene Corporation; Director, Calgon Carbon Corporation;
Director, National Picture Frame Corporation; Director and Chairman
of the Board, Tetra Corporation, 1991-1993; Director, Medalist
Corporation, 1992-1993. Age: 74 years old. Address: Way Hollow
Road and Woodland Road, Sewickley, Pennsylvania 15143.
o+KENNETH A. HIMMEL. Director of the Company; former Director, The Boston
Company, Inc. and Boston Safe Deposit and Trust Company; President
and Chief Executive Officer, Himmel & Co., Inc.; Vice Chairman,
Sutton Place Gourmet, Inc. Age: 49 years old. Address: Himmel and
Company, Inc., 399 Boylston Street, 11th Floor, Boston, Massachusetts
02116.
o*ARCH S. JEFFERY. Director of the Company; Financial Consultant.
Director Access Capital Strategies Community Investment Fund, Inc.,
Institutional Investor Portfolio. Age: 78 years old. Address:
1817 Foxcroft Lane, Unit 306, Allison Park, Pennsylvania 15101.
o+STEPHEN J. LOCKWOOD. Director of the Company; President and CEO, LDG
Management Company, Inc.; CEO, LDG Reinsurance Underwriters, SRRF
Management Inc. and Medical Reinsurance Underwriters Inc. Age: 48
years old. Address 401 Edgewater Place, Wakefield, Massachusetts
01880.
o+ROBERT D. McBRIDE. Director of the Company; Director and Chairman,
McLouth Steel; Director, Salem Corporation. Director, SMS/Concast,
Inc. (1983-1991). Age: 68 years old. Address: 15 Waverly Lane,
Grosse Pointe Farms, Michigan 48236.
o+JOHN J. SCIULLO. Director of the Company; Dean Emeritus and Professor
of Law, Duquesne University Law School; Director, Urban Redevelopment
Authority of Pittsburgh. Member of Advisory Committee on Descendants
Estates Laws of Pennsylvania. Age: 64 years old. Address: 321
Gross Street, Pittsburgh, Pennsylvania 15224.
o+ROSLYN M. WATSON. Director of the Company; Principal, Watson Ventures;
Director, American Express Centurion Bank; Director, Harvard/Pilgrim
Health Care, Inc.; Director, Massachusetts Electric Company;
Director, The Hyams Foundation, Inc.; prior to February 1993, Real
Estate Development Project Manager and Vice President, The Gunwyn
Company. Age: 46 years old. Address: 25 Braddock Park, Boston,
Massachusetts 02116-5816.
#ELIZABETH BACHMAN. Vice President and Assistant Secretary of the
Company, The Dreyfus/Laurel Funds Trust and The Dreyfus/Laurel Tax-
Free Municipal Funds (since January 1996); Counsel, Premier Mutual
Funds Services, Inc. Prior to September 1995, she was enrolled at
the Fordham University school of Law and received her J.D. in May
1995. Prior to September 1992, she was an Assistant at National
Association for Public Interest Law. Age: 26 years old. Address:
200 Park Avenue, New York, New York 10166.
#MARIE E. CONNOLLY. President and Treasurer of the Company, The
Dreyfus/Laurel Funds Trust and The Dreyfus/Laurel Tax-Free Municipal
Funds (since September 1994); Vice President of the Company (March
1994 to September 1994); President, Funds Distributor, Inc. (since
1992); Treasurer, Funds Distributor, Inc. (July 1993 to April 1994);
COO, Funds Distributor, Inc. (since April 1994); Director, Funds
Distributor, Inc. (since July 1992); President, COO and Director,
Premier Mutual Fund Services, Inc. (since April 1994); Senior Vice
President and Director of Financial Administration, The Boston
Company Advisors, Inc. (December 1988 to May 1993). Age: 37 years
old. Address: One Exchange Place, Boston, Massachusetts 02109.
#FREDERICK C. DEY. Vice President of the Company, The Dreyfus/Laurel
Funds Trust and The Dreyfus/Laurel Tax-Free Municipal Funds (since
September 1994); Senior Vice President, Premier Mutual Fund Services,
Inc. (since August 1994); Vice President, Funds Distributor, Inc.
(since August 1994); Fundraising Manager, Swim Across America
(October 1993 to August 1994); General Manager, Spring Industries
(August 1988 to October 1993). Age: 33 years old. Address: Premier
Mutual Fund Services, Inc., Age: 33 years old. One Exchange Place,
Boston Massachusetts 02109.
#ERIC B. FISCHMAN. Vice President and Assistant Secretary of the Company
(since January 1996), The Dreyfus/Laurel Funds Trust and The
Dreyfus/Laurel Tax-Free Municipal Funds; Vice President and Associate
General Counsel, Premier Mutual Fund Services, Inc. ; Vice President
and Associate General Counsel, Funds Distributor, Inc. (since August
1994); Staff Attorney, Federal Reserve Board (September 1992 to June
1994); Summer Associate, Venture Economics (May 1991 to September
1991); Summer Associate, Suffolk County District Attorney (June 1990
to August 1990). Age: 31 years old. Address: 200 Park Avenue, New
York, New York 10166.
#MARGARET PARDO. Assistant Secretary of the Company, The Dreyfus/Laurel
Funds Trust and the Dreyfus/Laurel Tax-Free Municipal Fund (since
January 1996); Paralegal, Premier Mutual Fund Services, Inc. Prior
to April 1995, she was a Medical Coordination Officer at ORBIS
International. Prior to June 1992, she worked as a Program
Coordinator at Physicians World Communications Group. Age: 27 years
old. Address: 200 Park Avenue, New York, New York 10166.
#JOHN E. PELLETIER. Vice President and Secretary of the Company, The
Dreyfus/Laurel Funds Trust and The Dreyfus/Laurel Tax-Free Municipal
Funds (since September 1994); Senior Vice President, General Counsel
and Secretary, Funds Distributor, Inc. (since April 1994); Senior
Vice President, General Counsel and Secretary, Premier Mutual Fund
Services, Inc. (since August 1994); Counsel, The Boston Company
Advisors, Inc. (February 1992 to March 1994); Associate, Ropes & Gray
(August 1990 to February 1992); Associate, Sidley & Austin (June 1989
to August 1990). Age: 31 years old. Address: One Exchange Place,
Boston, Massachusetts 02109.
#JOHN J. PYBURN. Assistant Treasurer of the Company, The Dreyfus Laurel
Funds Trust and The Dreyfus/Laurel Tax-Free Municipal Funds (since
January 1996); Vice President of Premier Mutual Fund Services, Inc.
and an officer of other investment companies advised or administered
by Dreyfus. From 1984 to July 1994, he was Assistant Vice President
in the Mutual Fund Accounting Department of Dreyfus. Age: 61 years
old. Address: 200 Park Avenue, New York, New York 10166.
JOSEPH S. TOWER, III. Assistant Treasurer of the Company, The
Dreyfus/Laurel Funds Trust and The Dreyfus/Laurel Tax-Free Municipal
Funds (since January 1996); Senior Vice President Treasurer and Chief
Financial Officer of Premier Mutual Fund Services, Inc. and an
officer of other investment companies advised or administered by
Dreyfus. From July 1988 to August 1994, he was employed by The
Boston Company, Inc. where he held various management positions in
the Corporate Finance and Treasury areas. Age 33 years old.
Address: One Exchange Place, Boston Massachusetts 02109.
____________________________
* "Interested person" of the Company, as defined in the 1940 Act.
o Member of the Audit Committee.
+ Member of the Nominating Committee.
# Officer also serves as an officer for other investment companies
advised by Dreyfus.
The officers and Directors of the Company as a group owned
beneficially less than 1% of the total Investor and Class R shares of the
Fund outstanding as of June 6, 1996.
No officer or employee of Premier (or of any parent, subsidiary or
affiliate thereof) receives any compensation from the Company for serving
as an officer or Director of the Company. In addition, no officer or
employee of Dreyfus (or of any parent or subsidiary or affiliate thereof)
serves as an officer or Director of the Company. The Dreyfus/Laurel Funds
pay each Director/Trustee who is not an "interested person" of the Company
(as defined in the 1984 Act), $27,000 per annum (and an additional $75,000
for the Chairman of the Board of Directors/Trustees of the Dreyfus/Laurel
Funds). In addition, the Dreyfus/Laurel Funds pays each Director/Trustee
who is not an "interested person" of the Company (as defined in the 1940
Act) $1,000 per joint Dreyfus/Laurel Funds Board meeting attended, plus
$750 per joint Dreyfus/Laurel Funds Audit committee meeting attended, and
reimburses each Director/Trustee who is not an "interested person" of the
Company (as defined in the 1940 Act) for travel and out-of-pocket
expenses.
For the fiscal year ended October 31, 1995, the aggregate amount of
fees and expenses received by each current Director of the Company from
the Company and all other Funds in the Dreyfus Family of Funds for which
such person is a Board member were as follows:
<TABLE>
<CAPTION>
Total
Pension or Compensation
Retirement From the
Benefits Estimated Company
Aggregate Accrued as Annual and Fund
Compensation Part of Benefits Complex Paid
From the the Company's Upon to Board
Name of Board Member Company # Expenses Retirement Member
- -------------------- ---------- -------- ---------- ------
<S> <C> <C> <C> <C>
Ruth M. Adams $131 None None $ 32,500
Francis P. Brennan* 231 None None 57,500
Joseph S. DiMartino** None None None $448,618***
James M. Fitzgibbons 131 None None 32,500
J. Tomlinson Fort** None None None None
Arthur L. Goeschel 131 None None 32,500
Kenneth A. Himmel 131 None None 32,500
Arch S. Jeffery** None None None None
Stephen J. Lockwood 131 None None 32,500
Robert D. McBride 131 None None 32,500
John J. Sciullo 131 None None 32,500
Roslyn M. Watson 131 None None 32,500
# Amounts required to be paid by the Company directly to the non-interested Directors, that would be applied to offset a portion
of the management fee payable to Dreyfus, are in fact paid directly by Dreyfus to the non-interested Directors. Amount does
not include reimbursed expenses for attending Board meetings.
* Compensation of Francis Brennan includes $25,000 paid by the Dreyfus/Laurel Funds to be Chairman of the Board.
** Joseph S. DiMartino, J. Tomlinson Fort and Arch S. Jeffery are paid directly by Dreyfus for serving as Board members of the
Company and the funds in the Dreyfus/Laurel Funds. For the fiscal year ended October 31, 1996, the aggregate amount of fees
and expenses received by Joseph DiMartino, J. Tomlinson Fort and Arch S. Jeffery from Dreyfus for serving as a Board member of
the Company would be $131, and for serving as a Board member of all funds in the Dreyfus/Laurel Funds (including the Company)
would be $32,500, respectively.
*** Estimated amounts for the fiscal year ending October 31, 1996.
</TABLE>
MANAGEMENT ARRANGEMENTS
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Management
of the Fund."
Management Agreement. Dreyfus serves as the investment manager for
the Fund pursuant to an Investment Management Agreement with the Company
dated April 4, 1994 ("Management Agreement"), transferred to Dreyfus as of
October 17, 1994. Pursuant to the Management Agreement, Dreyfus provides,
or arranges for one or more third parties to provide, investment advisory,
administrative, custody, fund accounting and transfer agency services to
the Fund. As investment manager, Dreyfus manages the Fund by making
investment decisions based on the Fund's investment objective, policies
and restrictions. The Management Agreement is subject to review and
approval at least annually by the Board of Directors.
The Management Agreement will continue from year to year provided
that a majority of the Directors who are not interested persons of the
Company and either a majority of all Directors or a majority of the
shareholders of the Fund approve its continuance. The Company may
terminate the Management Agreement, without prior notice to Dreyfus, upon
the vote of a majority of the Board of Directors or upon the vote of a
majority of the Fund's outstanding voting securities. Dreyfus may
terminate the Management Agreement upon sixty (60) days' written notice to
the Company. The Management Agreement will terminate immediately and
automatically upon its assignment.
The following persons are officers and/or directors of Dreyfus:
Howard Stein, Chairman of the Board and Chief Executive Officer; W. Keith
Smith, Vice Chairman of the Board; Christopher M. Condron, President,
Chief Operating Officer and a director; Stephen E. Canter, Vice Chairman,
Chief Investment Officer and a director; Stephen E. Canter, Vice Chairman,
Chief Investment Officer and a director; Lawrence S. Kash, Vice Chairman-
Distribution and a director; Philip L. Toia, Vice Chairman-Operations and
Administration and a director; William T. Sandalls, Jr., Senior Vice
President and Chief Financial Office; Elie M. Genadry, Vice President-
Institutional Sales; William F. Glavin, Jr., Vice President-Corporate
Development; Mark N. Jacobs, Vice President, General Counsel and
Secretary; Patrice M. Kozlowski, Vice President-Corporate Communications;
Mary Beth Leibig, Vice President-Human Resources; Jeffrey N. Nachman, Vice
President-Mutual Fund Accounting; Andrew S. Wasser, Vice President-
Information Systems; Maurice Bendrihem, Controller; Elvira Oslapas,
Assistant Secretary; and Mandell L. Berman, Frank V. Cahouet, Alvin E.
Friedman, Lawrence M. Greene and Julian M. Smerling, directors.
For the period from November 1, 1995 (commencement of operations) to
April 30, 1996, the management fee payable by the Fund to Dreyfus was
$45,976.
PURCHASE OF FUND SHARES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "How to Buy
Fund Shares."
The Distributor. The Distributor serves as the Fund's distributor
pursuant to an agreement which is renewable annually. The Distributor
also acts as distributor for the other funds in the Dreyfus Family of
Funds and for certain other investment companies.
Dreyfus Teletransfer Privilege. Dreyfus Teletransfer purchase orders
may be made at any time. Purchase orders received by 4:00 p.m., New York
time, on any business day that Dreyfus Transfer, Inc. Fund's transfer and
dividend disbursing agent (the "Transfer Agent"), and the New York Stock
Exchange ("NYSE") are open for business will be credited to the
shareholders's Fund account on the next bank business day following such
purchase order. Purchase orders made after 4:00 P.M., New York time, on
any business day the Transfer agent and the NYSE are open for business or
orders made on Saturday, Sunday or any Federal holiday (e.g., when the
NYSE is not open for business) will be credited to the shareholders's Fund
account the second bank business day following such purchase order.
Reopening an Account. An investor may reopen an account with a
minimum investment of $100 without filing a new Account Application during
the calendar year in which the account is closed or during the following
calendar year, provided the information on the old Account Application is
still applicable.
In-Kind Purchases. If the following conditions are satisfied, the
Fund may at its discretion, permit the purchase of shares through an "in-
kind" exchange of securities. Any securities exchanged must meet the
investment objective, policies and limitations of the Fund, must have a
readily ascertainable market value, must be liquid and must not be subject
to restrictions on resale. The market value of any securities exchanged,
plus any cash, must be at least equal to $25,000. Shares purchased in
exchange for securities generally cannot be redeemed for fifteen days
following the exchange in order to allow time for the transfer to settle.
The basis of the exchange will depend upon the relative NAV of the
Shares purchased and securities exchanged. Securities accepted by the
Fund will be valued in the same manner as the Fund values its assets. Any
interest earned on the securities following their delivery to the Fund and
prior to the exchange will be considered in valuing the securities. All
interest, dividends, subscription or other rights attached to the
securities become the property of the Fund, along with the securities.
For further information about "in-kind" purchases, call 1-800-645-6561.
DISTRIBUTION PLAN
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled
"Distribution Plan."
Investor shares are subject to fees for distribution and shareholder
services.
Distribution Plan--Investor Shares. The SEC has adopted Rule 12b-1
under the 1940 Act ("Rule") regulating the circumstances under which
investment companies such as the Company may, directly or indirectly, bear
the expenses of distributing their shares. The Rule defines distribution
expenses to include expenditures for "any activity which is primarily
intended to result in the sale of fund shares." The Rule, among other
things, provides that an investment company may bear such expenses only
pursuant to a plan adopted in accordance with the Rule. With respect to
the Investor shares of the Fund, the Company has adopted a Distribution
Plan ("Plan") and may enter into Agreements with Agents pursuant to the
Plan.
Under the Plan, the Fund may spend annually up to 0.25% of its
average daily net assets attributable to Investor shares for costs and
expenses incurred in connection with the distribution of, and shareholder
servicing with respect to, the Investor shares.
The Plan provides that a report of the amounts expended under the
Plan, and the purposes for which such expenditures were incurred, must be
made to the Company's Directors for their review at least quarterly. In
addition, the Plan provides that it may not be amended to increase
materially the costs which the Fund may bear for distribution pursuant to
the Plan without approval of the Fund's shareholders, and that other
material amendments of the Plan must be approved by the vote of a majority
of the Directors and of the Directors who are not "interested persons" of
the Company (as defined in the 1940 Act) and who do not have any direct or
indirect financial interest in the operation of the Plan, cast in person
at a meeting called for the purpose of considering such amendments. The
Plan is subject to annual approval by the entire Board of Directors and by
the Directors who are neither interested persons nor have any direct or
indirect financial interest in the operation of the Plan, by vote cast in
person at a meeting called for the purpose of voting on the Plan. The
Plan is terminable, as to the Fund's Investor shares, at any time by vote
of a majority of the Directors who are not interested persons and have no
direct or indirect financial interest in the operation of the Plan or by
vote of the holders of a majority of the outstanding Investor shares of
the Fund.
For the period from November 1, 1995 (commencement of operations) to
April 30, 1996, the Fund paid $2,078, the entire amount of which was paid
to Dreyfus Service Corporation, pursuant to the Plan.
REDEMPTION OF FUND SHARES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "How to
Redeem Fund Shares."
Check Redemption Privilege. An investor may indicate on the Account
Application or by later written request that the Fund provide Redemption
Checks ("Checks") drawn on the Fund's account. Checks will be sent only
to the registered owner(s) of the account and only to the address of
record. The Account Application or later written request must be manually
signed by the registered owner(s). Checks may be made payable to the order
of any person in an amount of $500 or more. When a Check is presented to
the Transfer Agent for payment, the Transfer Agent, as the investor's
agent, will cause the Fund to redeem a sufficient number of full or
fractional shares in the investor's account to cover the amount of the
Check. Dividends are earned until the Check clears. After clearance, a
copy of the Check will be returned to the investor. Investors generally
will be subject to the same rules and regulations that apply to checking
accounts, although the election of this Privilege creates only a
shareholder-transfer agent relationship with the Transfer Agent.
If the amount of the Check is greater than the value of the shares in
an investor's account, the Check will be returned marked insufficient
funds. Checks should not be used to close an account.
Wire Redemption Privilege. By using this Privilege, the investor
authorizes the Transfer Agent to act on wire or telephone redemption
instructions from any person representing himself or herself to be the
investor, or a representative of the investor's Agent, and reasonably
believed by the Transfer Agent to be genuine. Ordinarily, the Fund will
initiate payment for shares redeemed pursuant to this Privilege on the
next business day after receipt if the Transfer Agent receives the
redemption request in proper form. Redemption proceeds will be
transferred by Federal Reserve wire only to the commercial bank account
specified by the investor on the Account Application or Shareholder
Services Form. Redemption proceeds, if wired, must be in the amount of
$1,000 or more and will be wired to the investor's account at the bank of
record designated in the investor's file at the Transfer Agent, if the
investor's bank is a member of the Federal Reserve System, or to a
correspondent bank if the investor's bank is not a member. Fees
ordinarily are imposed by such bank and usually are borne by the investor.
Immediate notification by the correspondent bank to the investor's bank is
necessary to avoid a delay in crediting the funds to the investor's bank
account.
Investors with access to telegraphic equipment may wire redemption
requests to the Transfer Agent by employing the following transmittal
code, which may be used for domestic or overseas transmissions:
Transfer Agent's
Transmittal Code Answer Back Sign
144295 144295 TSSG PREP
Investors who do not have direct access to telegraphic equipment may
have the wire transmitted by contacting a TRT Cables operator at 1-800-
654-7171, toll free. Investors should advise the operator that the above
transmittal code must be used and should also inform the operator of the
Transfer Agent's answer back sign.
To change the commercial bank or account designated to receive
redemption proceeds, a written request must be sent to the Transfer Agent.
This request must be signed by each shareholder, with each signature
guaranteed as described below under "Stock Certificates; Signatures."
Stock Certificates; Signatures. Any certificates representing Fund
shares to be redeemed must be submitted with the redemption request.
Written redemption requests must be signed by each shareholder, including
each holder of a joint account, and each signature must be guaranteed.
Signatures on endorsed certificates submitted for redemption also must be
guaranteed. The Transfer Agent has adopted standards and procedures
pursuant to which signature-guarantees in proper form generally will be
accepted from domestic banks, brokers, dealers, credit unions, national
securities exchanges, registered securities associations, clearing
agencies and savings associations as well as from participants in the NYSE
Medallion Signature Program, the Securities Transfer Agents Medallion
Program ("STAMP") and the Stock Exchanges Medallion Program. Guarantees
must be signed by an authorized signatory of the guarantor and "Signature-
Guaranteed" must appear with the signature. The Transfer Agent may
request additional documentation from corporations, executors,
administrators, trustees or guardians, and may accept other suitable
verification arrangements from foreign investors, such as consular
verification. For more information with respect to signature-guarantees,
please call one of the telephone numbers listed on the cover.
Dreyfus Teletransfer Privilege. Investors should be aware that if
they have selected the Dreyfus Teletransfer Privilege, any request for a
wire redemption will be effected as a Dreyfus Teletransfer transaction
through the ACH system unless more prompt transmittal specifically is
requested. Redemption proceeds will be on deposit in the investor's
account at an ACH member bank ordinarily two business days after receipt
of the redemption request. See "Purchase of Fund Shares--Dreyfus
Teletransfer Privilege."
Redemption Commitment. The Fund has committed itself to pay in cash
all redemption requests by any shareholder of record of the Fund, limited
in amount during any 90-day period to the lesser of $250,000 or 1% of the
value of the Fund's net assets at the beginning of such period. Such
commitment is irrevocable without the prior approval of the SEC. In the
case of requests for redemptions in excess of such amount, the Board of
Directors reserves the right to make payments in whole or in part in
securities or other assets in case of an emergency or any time a cash
distribution would impair the liquidity of the Fund to the detriment of
the existing shareholders. In this event, the securities would be valued
in the same manner as the Fund's portfolio is valued. If the recipient
sold such securities, brokerage charges would be incurred.
Suspension of Redemptions. The right of redemption may be suspended
or the date of payment postponed (a) during any period when the NYSE is
closed (other than customary weekend and holiday closings), (b) when
trading in the markets the Fund ordinarily utilizes is restricted, or when
an emergency exists as determined by the SEC so that disposal of the
Fund's investments or determination of its net asset value is not
reasonably practicable, or (c) for such other periods as the SEC by order
may permit to protect the Fund's shareholders.
SHAREHOLDER SERVICES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled
"Shareholder Services."
Fund Exchanges. Shares of any Class of the Fund may be exchanged for
shares of the respective Class of certain other funds advised or
administered by Dreyfus. Shares of the same Class of such funds purchased
by exchange will be purchased on the basis of relative net asset value per
share as follows:
A. Exchanges for shares of funds that are offered without a sales
load will be made without a sales load.
B. Shares of funds purchased without a sales load may be exchanged
for shares of other funds sold with a sales load, and the
applicable sales load will be deducted.
C. Shares of funds purchased with a sales load may be exchanged
without a sales load for shares of other funds sold without a
sales load.
D. Shares of funds purchased with a sales load, shares of funds
acquired by a previous exchange from shares purchased with a
sales load and additional shares acquired through reinvestment
of dividends or other distributions of any such funds
(collectively referred to herein as "Purchased Shares") may be
exchanged for shares of other funds sold with a sales load
(referred to herein as "Offered Shares"), provided that, if the
sales load applicable to the Offered Shares exceeds the maximum
sales load that could have been imposed in connection with the
Purchased Shares (at the time the Purchased Shares were
acquired), without giving effect to any reduced loads, the
difference will be deducted.
To accomplish an exchange under item D above, shareholders must
notify the Transfer Agent of their prior ownership of fund shares and
their account number.
Exchanges of Class R shares held by a Retirement Plan may be made
only between the investor's Retirement Plan account in one fund and such
investor's Retirement Plan account in another fund.
To establish a personal Retirement Plan by exchange, shares of the
fund being exchanged must have a value of at least the minimum initial
investment required for the fund into which the exchange is being made.
For Dreyfus-sponsored Keogh Plans, IRAs and Simplified Employee Pension
Plans ("SEP-IRAs") with only one participant, the minimum initial
investment is $750. To exchange shares held in Corporate Plans, 403(b)(7)
Plans and IRAs set up under a SEP-IRA with more than one participant, the
minimum initial investment is $100 if the plan has at least $2,500
invested among the funds in the Dreyfus Family of Funds. To exchange
shares held in a personal retirement plan account, the shares exchanged
must have a current value of at least $100.
Dreyfus Auto-Exchange Privilege. The Dreyfus Auto-Exchange Privilege
permits an investor to purchase, in exchange for shares of the Fund,
shares of the same Class of another fund in the Dreyfus Family of Funds.
This Privilege is available only for existing accounts. With respect to
Class R shares held by a Retirement Plan, exchanges may be made only
between the investor's Retirement Plan account in one fund and such
investor's Retirement Plan account in another fund. Shares will be
exchanged on the basis of relative net asset value as described above
under "Fund Exchanges." Enrollment in or modification or cancellation of
this Privilege is effective three business days following notification by
the investor. An investor will be notified if the investor's account
falls below the amount designated to be exchanged under this Privilege.
In this case, an investor's account will fall to zero unless additional
investments are made in excess of the designated amount prior to the next
Dreyfus Auto-Exchange transaction. Shares held under IRA and other
retirement plans are eligible for this Privilege. Exchanges of IRA shares
may be made between IRA accounts and from regular accounts to IRA
accounts, but not from IRA accounts to regular accounts. With respect to
all other retirement accounts, exchanges may be made only among those
accounts.
Fund exchanges and Dreyfus Auto-Exchange Privilege are available to
shareholders resident in any state in which shares of the fund being
acquired may legally be sold. Shares may be exchanged only between
accounts having identical names and other identifying designations.
Shareholder Services Forms and prospectuses of the other funds may be
obtained by calling 1-800-645-6561. The Fund reserves the right to reject
any exchange request in whole or in part. The Fund exchange service or
Dreyfus Auto-Exchange Privilege may be modified or terminated at any time
upon notice to shareholders.
Automatic Withdrawal Plan. The Automatic Withdrawal Plan permits an
investor with a $5,000 minimum account to request withdrawal of a
specified dollar amount (minimum of $50) on either a monthly or quarterly
basis. Withdrawal payments are the proceeds from sales of Fund shares,
not the yield on the shares. If withdrawal payments exceed reinvested
dividends and other distributions, the investor's shares will be reduced
and eventually may be depleted. An Automatic Withdrawal Plan may be
established by completing the appropriate application available from the
Distributor. Automatic Withdrawal may be terminated at any time by the
investor, the Fund or the Transfer Agent. Shares for which certificates
have been issued may not be redeemed through the Automatic Withdrawal
Plan.
Dreyfus Dividend Sweep. Dreyfus Dividend Sweep allows investors to
invest on the payment date their dividends or dividends and capital gain
distributions, if any, from the Fund in shares of the same Class of
certain other funds in the Dreyfus Family of Funds of which the investor
is a shareholder. Shares of the same Class of other funds purchased
pursuant to this Privilege will be purchased on the basis of relative net
asset value per share as follows:
A. Dividends and other distributions paid by a fund may be invested
without imposition of a sales load in shares of other funds that
are offered without a sales load.
B. Dividends and other distributions paid by a fund which does not
charge a sales load may be invested in shares of other funds
sold with a sales load, and the applicable sales load will be
deducted.
C. Dividends and other distributions paid by a fund which charges a
sales load may be invested in shares of other funds sold with a
sales load (referred to herein as "Offered Shares"), provided
that, if the sales load applicable to the Offered Shares exceeds
the maximum sales load charged by the fund from which dividends
or other distributions are being swept, without giving effect to
any reduced loads, the difference will be deducted.
D. Dividends and other distributions paid by a fund may be invested
in shares of other funds that impose a CDSC and the applicable
CDSC, if any, will be imposed upon redemption of such shares.
Corporate Pension/Profit-Sharing and Retirement Plans. The Fund
makes available to corporations a variety of prototype pension and profit-
sharing plans including a 401(k) Salary Reduction Plan. In addition, the
Fund makes available Keogh Plans, IRAs, including SEP-IRAs and IRA
"Rollover Accounts," and 403(b)(7) Plans. Plan support services also are
available.
Investors who wish to purchase Fund shares in conjunction with a
Keogh Plan, a 403(b)(7) Plan or an IRA, including an SEP-IRA, may request
from the Distributor forms for adoption of such plans.
The entity acting as custodian for Keogh Plans, 403(b)(7) Plans or
IRAs may charge a fee, payment of which could require the liquidation of
shares. All fees charged are described in the appropriate form.
Shares may be purchased in connection with these plans only by direct
remittance to the entity acting as custodian. Purchases for these plans
may not be made in advance of receipt of funds.
The minimum initial investment for corporate plans, Salary Reduction
Plans, 403(b)(7) Plans and SEP-IRAs with more than one participant, is
$2,500 with no minimum on subsequent purchases. The minimum initial
investment for Dreyfus-sponsored Keogh Plans, IRAs, SEP-IRAs and 403(b)(7)
Plans with only one participant, is normally $750, with no minimum on
subsequent purchases. Individuals who open an IRA may also open a non-
working spousal IRA with a minimum investment of $250.
The investor should read the Prototype Retirement Plan and the
appropriate form of Custodial Agreement for further details on
eligibility, service fees and tax implications, and should consult a tax
adviser.
DETERMINATION OF NET ASSET VALUE
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "How to Buy
Fund Shares."
Restricted securities, as well as securities or other assets for
which market quotations are not readily available, or which are not valued
by a pricing service approved by the Board of Directors, are valued at
fair value as determined in good faith by the Board of Directors. The
Board of Directors will review the method of valuation on a current basis.
In making their good faith valuation of restricted securities, the
Directors generally will take the following factors into consideration:
restricted securities which are securities of the same class of securities
for which a public market exists usually will be valued at market value
less the same percentage discount at which purchased. This discount will
be reviewed periodically by the Board of Directors if the Directors
believe that it no longer reflects the value of the restricted securities.
Restricted securities not of the same class as securities for which a
public market exists usually will be valued initially at cost. Any
subsequent adjustment from cost will be based upon considerations deemed
relevant by the Board of Directors.
New York Stock Exchange Closings. The holidays (as observed) on
which the NYSE is closed currently are: New Year's Day, Presidents' Day,
Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day
and Christmas Day.
DIVIDENDS, OTHER DISTRIBUTIONS AND TAXES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Dividends,
Other Distributions and Taxes."
The term "regulated investment company" does not imply the
supervision of management or investment practices or policies by any
government agency.
To qualify for treatment as a regulated investment company ("RIC")
under the Internal Revenue Code of 1986, as amended (the "Code"), the Fund
(1) must distribute to its shareholders each year at least 90% of its
investment company taxable income (generally consisting of net investment
income, net short-term capital gains and net gains from certain foreign
currency transactions) ("Distribution Requirement"), (2) must derive at
least 90% of its annual gross income from specified sources ("Income
Requirement"), (3) must derive less than 30% of its annual gross income
from the sale or disposition of any of the following that are held for
less than three months -- (a) securities, (b) non-foreign-currency options
and futures and (c) foreign currencies (or foreign currency options,
futures and forward contracts) that are not directly related to the Fund's
principal business of investing in securities (or options and futures with
respect thereto) ("Short-Short Limitation") -- and (4) must meet certain
asset diversification and other requirements.
Any dividend or other distribution paid shortly after an investor's
purchase of shares may have the effect of reducing the net asset value of
the shares below the cost of his investment. Such a dividend or other
distribution would be a return on investment in an economic sense,
although taxable as stated in the Fund's Prospectus. In addition, if a
shareholder sells shares of the Fund held for six months or less and
receives a capital gain distribution with respect to those shares, any
loss incurred on the sale of those shares will be treated as a long-term
capital loss to the extent of the capital gain distribution received.
Dividends and other distributions declared by the Fund in October,
November or December of any year and payable to shareholders of record on
a date in any of those months are deemed to have been paid by the Fund and
received by the shareholders on December 31 of that year if the
distributions are paid by the Fund during the following January.
Accordingly, those distributions will be taxed to shareholders for the
year in which that December 31 falls.
Interest received by the Fund may be subject to income, withholding
or other taxes imposed by foreign countries and U.S. possessions that
would reduce the yield on its securities. Tax conventions between certain
countries and the United States may reduce or eliminate these foreign
taxes, however, and many foreign countries do not impose taxes on capital
gains in respect of investments by foreign investors.
Gains from the sale or other disposition of foreign currencies
(except certain gains that may be excluded by future regulations), and
gains from options, futures and forward contracts derived by the Fund with
respect to its business of investing in securities or foreign currencies,
will qualify as permissible income under the Income Requirement. However,
income from the disposition of options and futures contracts (other than
those on foreign currencies) will be subject to the Short-Short Limitation
if they are held for less than three months. Income from the disposition
of foreign currencies, and options, futures and forward contracts thereon,
that are not directly related to the Fund's principal business of
investing in securities (or options and futures with respect to
securities) also will be subject to the Short-Short Limitation if they are
held for less than three months.
If the Fund satisfies certain requirements, any increase in value of
a position that is part of a "designated hedge" will be offset by any
decrease in value (whether realized or not) of the offsetting hedging
position during the period of the hedge for purposes of determining
whether the Fund satisfies the Short-Short Limitation. Thus, only the net
gain (if any) from the designated hedge will be included in gross income
for purposes of that limitation. The Fund will consider whether it should
seek to qualify for this treatment for its hedging transactions. To the
extent the Fund does not so qualify, it may be forced to defer the closing
out of certain options, futures, forward contracts and foreign currency
positions beyond the time when it otherwise would be advantageous to do
so, in order for the Fund to continue to qualify as a RIC.
Ordinarily, gains and losses realized from portfolio transactions
will be treated as capital gain and loss. However, a portion of the gain
or loss from the disposition of foreign currencies and certain foreign
currency denominated securities (including debt instruments and certain
financial forward, futures and option contracts and preferred stock) may
be treated as ordinary income or loss under Section 988 of the Code. In
addition, all or a portion of any gain realized from the sale or other
disposition of certain market discount bonds will be treated as ordinary
income. Moreover, all or a portion of the gain realized from engaging in
"conversion transactions" may be treated as ordinary income under Section
1258 of the Code. "Conversion transactions" are defined to include
certain forward, futures, option and straddle transactions, transactions
marketed or sold to produce capital gains and transactions described in
Treasury regulations to be issued in the future.
Under Section 1256 of the Code, any gain or loss realized by the Fund
from certain futures, forward contracts and options transactions will be
treated as 60% long-term capital gain or loss and 40% short-term capital
gain or loss. Gain or loss will arise upon exercise or lapse of such
contracts and options as well as from closing transactions. In addition,
any such contracts or options remaining unexercised at the end of the
Fund's taxable year will be treated as sold for their then fair market
value (a process known as "marking to market"), resulting in additional
gain or loss to the Fund characterized in the manner described above.
Offsetting positions held by the Fund involving certain contracts or
options may constitute "straddles". "Straddles" are defined to include
"offsetting positions" in actively traded personal property. The tax
treatment of straddles is governed by Sections 1092 and 1258 of the Code,
which, in certain circumstances, override or modify Sections 1256 and 988.
As such, all or a portion of any capital gain from certain straddle
transactions may be recharacterized as ordinary income. If the Fund were
treated as entering into straddles by reason of its engaging in certain
forward contracts or options transactions, such straddles would be
characterized as "mixed straddles" if the forward contracts or options
transactions comprising a part of such straddles were governed by Section
1256. The Fund may make one or more elections with respect to mixed
straddles; depending on which election is made, if any, the results to the
Fund may differ. If no election is made, then to the extent the straddle
and conversion transactions rules apply to positions established by the
Fund, losses realized by the Fund will be deferred to the extent of
unrealized gain in the offsetting position. Moreover, as a result of the
straddle rules, short-term capital loss on straddle positions may be
recharacterized as long-term capital loss, and long-term capital gains may
be treated as short-term capital gains or ordinary income.
Investment by the Fund in securities issued or acquired at a discount
(for example, zero coupon securities) could, under special tax rules,
affect the amount and timing of distributions to shareholders by causing
the Fund to recognize income prior to the receipt of cash payments. For
example, the Fund would be required to take into gross income annually a
portion of the discount (or deemed discount) at which the securities were
issued and could need to distribute such income to satisfy the
Distribution Requirement and to avoid imposition of the 4% excise tax
referred to in the Fund's Prospectus under "Dividends, Other Distributions
and Taxes." In such case, the Fund may have to dispose of securities it
might otherwise have continued to hold in order to generate cash to
satisfy these requirements.
State and Local Taxes. Depending upon the extent of the Fund's
activities in states and localities in which it is deemed to be conducting
business, it may be subject to the tax laws thereof. Shareholders are
advised to consult their tax advisers concerning the application of state
and local taxes.
Foreign Shareholders - U.S. Federal Income Taxation. U.S. federal
income taxation of a shareholder who, as to the United States, is a
non-resident alien individual, a foreign trust or estate, a foreign
corporation or a foreign partnership (a "foreign shareholder") depends on
whether the income from the Fund is "effectively connected" with a U.S.
trade or business carried on by the shareholder, as discussed generally
below. Special U.S. federal income tax rules that differ from those
described below may apply to certain foreign persons who invest in the
Fund, such as a foreign shareholder entitled to claim the benefits of an
applicable tax treaty. Foreign shareholders are advised to consult their
own tax advisers with respect to the particular tax consequences to them
of an investment in the Fund.
Foreign Shareholders - Income Not Effectively Connected. If the
income from the Fund is not effectively connected with a U.S. trade or
business carried on by the foreign shareholder, distributions of
investment company taxable income generally will be subject to U.S.
federal withholding tax of 30% (or lower treaty rate).
Capital gains realized by foreign shareholders on the sale of Fund
shares and distributions to them of net capital gain (the excess of net
long-term capital gain over net short-term capital loss) generally will
not be subject to U.S. federal income tax unless the foreign shareholder
is a non-resident alien individual and is physically present in the United
States for more than 182 days during the taxable year. In the case of
certain foreign shareholders, the Fund may be required to withhold U.S.
Federal income tax at a rate of 31% of capital gain distributions and of
the gross proceeds from a redemption of Fund shares unless the shareholder
furnishes the Fund with a certificate regarding the shareholder's foreign
status.
Foreign Shareholders - Effectively Connected Income. If a foreign
shareholder's ownership of Fund shares is effectively connected with a
U.S. trade or business carried on by a foreign shareholder, then all
distributions to that shareholder and any gains realized by that
shareholder on the disposition of the Fund shares will be subject to U.S.
federal income tax at the graduated rates applicable to U.S. citizens and
domestic corporations, as the case may be. Foreign shareholders also may
be subject to the branch profits tax.
Foreign Shareholders - Estate Tax. Foreign individuals generally are
subject to U.S. federal estate tax on their U.S. situs property, such as
shares of the Fund, that they own at the time of their death. Certain
credits against that tax and relief under applicable tax treaties may be
available.
PORTFOLIO TRANSACTIONS
All portfolio transactions of the Fund are placed on behalf of the
Fund by Dreyfus. Debt securities purchased and sold by the Fund are
generally traded on a net basis (i.e., without commission) through dealers
acting for their own account and not as brokers, or otherwise involve
transactions directly with the issuer of the instrument. This means that
a dealer (the securities firm or bank dealing with the Fund) makes a
market for securities by offering to buy at one price and sell at a
slightly higher price. The difference between the prices is known as a
spread. Other portfolio transactions may be executed through brokers
acting as agent. The Fund will pay a spread or commissions in connection
with such transactions. Dreyfus uses its best efforts to obtain execution
of portfolio transactions at prices which are advantageous to the Fund and
at spreads and commission rates, if any, which are reasonable in relation
to the benefits received. Dreyfus also places transactions for other
accounts that it provides with investment advice.
Brokers and dealers involved in the execution of portfolio
transactions on behalf of the Fund are selected on the basis of their
professional capability and the value and quality of their services. In
selecting brokers or dealers, Dreyfus will consider various relevant
factors, including, but not limited to, the size and type of the
transaction; the nature and character of the markets for the security to
be purchased or sold; the execution efficiency, settlement capability, and
financial condition of the broker-dealer; the broker-dealer's execution
services rendered on a continuing basis; and the reasonableness of any
spreads (or commissions, if any). Any spread, commission, fee or other
remuneration paid to an affiliated broker-dealer is paid pursuant to the
Company's procedures adopted in accordance with Rule 17e-1 of the 1940
Act.
Brokers or dealers may be selected who provide brokerage and/or
research services to the Fund and/or other accounts over which Dreyfus or
its affiliates exercise investment discretion. Such services may include
advice concerning the value of securities; the advisability of investing
in, purchasing or selling securities; the availability of securities or
the purchasers or sellers of securities; furnishing analyses and reports
concerning issuers, industries, securities, economic factors and trends,
portfolio strategy and performance of accounts; and effecting securities
transactions and performing functions incidental thereto (such as
clearance and settlement).
The receipt of research services from broker-dealers may be useful to
Dreyfus in rendering investment management services to the Fund and/or its
other clients; and, conversely, such information provided by brokers or
dealers who have executed transaction orders on behalf of other clients of
Dreyfus may be useful to these organizations in carrying out their
obligations to the Fund. The receipt of such research services does not
reduce these organizations' normal independent research activities;
however, it enables these organizations to avoid the additional expenses
which might otherwise be incurred if these organizations were to attempt
to develop comparable information through their own staffs.
The Company's Board of Directors periodically reviews Dreyfus'
performance of its responsibilities in connection with the placement of
portfolio transactions on behalf of the Fund and reviews the prices paid
by the Fund over representative periods of time to determine if they are
reasonable in relation to the benefits to the Fund.
Although Dreyfus manages other accounts in addition to the Fund,
investment decisions for the Fund are made independently from decisions
made for these other accounts. It sometimes happens that the same security
is held by more than one of the accounts managed by Dreyfus. Simultaneous
transactions may occur when several accounts are managed by the same
investment manager, particularly when the same investment instrument is
suitable for the investment objective of more than one account.
When more than one account is simultaneously engaged in the purchase
or sale of the same investment instrument, the prices and amounts are
allocated in accordance with a formula considered by Dreyfus to be
equitable to each account. In some cases this system could have a
detrimental effect on the price or volume of the investment instrument as
far as the Fund is concerned. In other cases, however, the ability of the
Fund to participate in volume transactions will produce better executions
for the Fund. While the Directors will continue to review simultaneous
transactions, it is their present opinion that the desirability of
retaining Dreyfus as investment manager to the Fund outweighs any
disadvantages that may be said to exist from exposure to simultaneous
transactions.
Portfolio Turnover. The portfolio turnover rate for the Fund is
calculated by dividing the lesser of the Fund's annual sales or purchases
of portfolio securities (exclusive of purchases and sales of securities
whose maturities at the time of acquisition were one year or less) by the
monthly average value of securities in the Fund during the year.
The portfolio turnover rate (not annualized) for the period from
November 1, 1995 (commencement of operations) to April 30, 1996 for the
Fund was 109.10%.
PERFORMANCE INFORMATION
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled
"Performance Information."
The average annual total return for the .496 year period ended April
30, 1996 was -1.27% for Investor shares and -1.01% for Class R shares.
Average annual total return is calculated by determining the ending redeemable
value of an investment purchased with a hypothetical $1,000 payment made at the
beginning of the period (assuming the reinvestment of dividends and other
distributions), dividing by the amount of the initial investment, taking
the "n"th root of the quotient (where "n" is the number of years in the
period) and subtracting 1 from the result.
The total return for the period November 1, 1995 (commencement of
operations) through April 30, 1996 for Investor shares was -.63% and for
Class R shares was -.50%. Total return is calculated by subtracting the
amount of the Fund's net asset value per share at the beginning of a
stated period from the net asset value per share at the end of the period
(after giving effect to the reinvestment of dividends and other
distributions during the period), and dividing the result by the net asset
value per share at the beginning of the period.
The current yield for the 30-day period ended April 30, 1996 was
5.92% for Investor shares and 6.18% for Class R shares. Yields are
computed by using standardized methods of calculation required by the SEC.
Yields are calculated by dividing the net investment income per share
earned during a 30-day (or one-month) period by the maximum offering price
per share on the last day of the period, according to the following
formula:
YIELD = 2[(a-b + 1)6-1]
cd
Where: a = dividends and interest earned during the period;
b = expenses accrued for the period (net of
reimbursements);
c = average daily number of shares outstanding during the
period that were entitled to receive dividends; and
d = maximum offering price per share on the last day of
the period.
Performance information for the Fund may be compared, in reports and
promotional literature, to indexes including, but not limited to: (i) the
Lehman Brothers Aggregate Bond Index; (ii) other Lehman Brothers indices,
the Dow Jones Industrial Average, or other appropriate unmanaged domestic
or foreign indices of performance of various types of investments so that
investors may compare the Fund's results with those of indices widely
regarded by investors as representative of the securities markets in
general; (iii) other groups of mutual funds tracked by Lipper Analytical
Services, a widely used independent research firm which ranks mutual funds
by overall performance, investment objectives and assets, or tracked by
other services, companies, publications, or persons who rank mutual funds
on overall performance or other criteria; (iv) the Consumer Price Index (a
measure of inflation) to assess the real rate of return from an investment
in the Fund; and (v) products managed by a universe of money managers with
similar country allocation and performance objectives. Unmanaged indices
may assume the reinvestment of dividends but generally do not reflect
deductions or administrative and management costs and expenses.
From time to time, Fund advertisements may include statistical data
or general discussions about the growth and development of Dreyfus
Retirement Services (in terms of new customers, assets under management,
market share, etc.) and its presence in the defined contribution plan
market.
From time to time, advertising material for the Fund may include
biographical information relating to its portfolio manager and may refer
to or include commentary by the portfolio manager relating to investment
strategy, asset growth, current or past business, political, economic or
financial conditions and other matters of general interest to investors.
INFORMATION ABOUT THE FUND
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "General
Information."
Each Fund share has one vote and, when issued and paid for in
accordance with the terms of the offering, is fully paid and non-
assessable. Fund shares have no preemptive or subscription rights and are
freely transferable.
The Fund will send annual and semi-annual financial statements to all
its shareholders.
CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT, COUNSEL
AND INDEPENDENT AUDITORS
Mellon Bank, One Mellon Bank Center, Pittsburgh, PA 15258, is the
Fund's custodian. Dreyfus Transfer, Inc., a wholly-owned subsidiary of
Dreyfus, is located at One American Express Plaza, Providence, Rhode
Island 02903 and is the Fund's transfer and dividend disbursing agent.
Under a transfer agency agreement with the Fund, the Transfer Agent
arranges for the maintenance of shareholder account records for the Fund,
the handling of certain communications between shareholders and the Fund
and the payment of dividends and distributions payable by the Fund. For
these services, the Transfer Agent receives a monthly fee computed on the
basis of the number of shareholder accounts it maintains for the Fund
during the month, and is reimbursed for certain out-of-pocket expenses.
The Dreyfus Transfer, Inc. and Mellon Bank, as custodian, have no part in
determining the investment policies of the Fund or which securities are to
be purchased or sold by the Fund.
Kirkpatrick & Lockhart LLP, 1800 Massachusetts Avenue, N.W., Second
Floor, Washington, D.C. 20036, has passed upon the legality of the shares
offered by the Prospectus and this Statement of Additional Information.
KPMG Peat Marwick LLP, One Mellon Bank Center, Pittsburgh,
Pennsylvania 15218, was appointed by the Directors to serve as the Fund's
independent auditors for the year ending October 31, 1996, providing audit
services including (1) examination of the annual financial statements, (2)
assistance, review and consultation in connection with the SEC, and (3)
review of the annual federal income tax return filed on behalf of the
Fund.
FINANCIAL STATEMENTS
The financial statements for the semi-annual period ended April 30,
1996, including notes to the financial statements and supplementary
information are included in the Semi-Annual Report to Shareholders. A
copy of the Semi-Annual Report accompanies this Statement of Additional
Information. The financial statements contained in the Semi-Annual Report
are incorporated herein by reference.
APPENDIX
DESCRIPTIONS OF SECURITIES RATINGS
Debt Instruments Ratings
Moody's Investors Service, Inc. (Moody's):
Aaa -- Bonds rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to
as "gilt-edge." Interest payments are protected by a large or
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position
of such issues.
Aa -- Bonds rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally
known as high-grade bonds. They are rated lower than the best bonds
because margins of protection may not be as large as in Aaa Securities or
fluctuation of protective elements may be of greater amplitude or there
may be other elements present which make the long-term risks appear
somewhat larger than in Aaa securities.
A -- Bonds rated A possess many favorable investment attributes and
are considered "upper medium-grade obligations."
Baa -- Bonds rated Baa are considered medium-grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present, but certain
protective elements may be lacking or may be characteristically unreliable
on any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
Those Bonds in the Aa and A groups which Moody's believes possess the
strongest investment attributes are designated by the symbols Aa 1 and A
1.
Standard & Poor's ("S&P"):
AAA -- This is the highest rating assigned by S&P to a debt
obligation and indicates an extremely strong capacity to pay principal and
interest.
AA -- Bonds rated AA also qualify as high-quality debt obligations.
Capacity to pay principal and interest is very strong, and in the majority
of instances they differ from AAA issues only in small degree.
A -- Bonds rated A have a strong capacity to pay principal and
interest, although they are somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions.
BBB -- Bonds rated BBB are regarded as having an adequate capacity to
pay interest and repay principal. Whereas it instantly exhibits adequate
protection changing circumstances are more likely to lead to a weakened
capacity to pay interest and repay principal for debt in this category
than in higher rated categories.
Plus (+) or Minus (-): The AA rating may be modified by the addition
of a plus or minus sign to show relative standing within the AA rating
category.
Commercial Paper Ratings
Moody's:
Commercial paper rated Prime by Moody's is based upon its evaluation
of many factors including: (1) management of the issuer; (2) the issuer's
industry or industries and the speculative-type risks which may be
inherent in certain areas; (3) the issuer's products in relation to
competition and customer acceptance; (4) liquidity; (5) amount and quality
of long-term debt; (6) trend of earnings over a period of ten years; (7)
financial strength of a parent company and the relationships which exist
with the issue; and (8) recognition by the management of obligations which
may be present or may arise as a result of public interest questions and
preparations to meet such obligations. Relative differences in these
factors determine whether the issuer's commercial paper is rated Prime-1,
Prime-2, or Prime-3.
Prime-1 indicates a superior capacity for repayment of short-term
promissory obligations. Prime-1 repayment capacity will normally be
evidenced by the following characteristics: (1) leading market positions
in well established industries; (2) high rates of return on funds
employed; (3) conservative capitalization structures with moderate
reliance on debt and ample asset protection; (4) broad margins in earnings
coverage of fixed financial charges and high internal cash generation; and
(5) well established access to a range of financial markets and assured
sources of alternative liquidity.
S&P:
Commercial paper rated by S&P has the following characteristics:
liquidity ratios adequate to meet cash requirements. Long-term senior
debt is rated A or better. The issuer has access to at least two
additional channels of borrowing. Basic earnings and cash flow have an
upward trend with allowance made for unusual circumstances. Typically,
the issuer's industry is well established and the issuer has a strong
position within the industry. The reliability and quality of management
are unquestioned. Relative strength or weakness of the above factors
determines whether the issuer's commercial paper is rated A-1, A-2, or A-
3.
A-1 -- This designation indicates that the degree of safety regarding
timely payment is either overwhelming or very strong. Those issues
determined to possess overwhelming safety characteristics are denoted with
a plus (+) sign designation.
Fitch Investors Service, Inc. ("Fitch"):
Commercial paper rated by Fitch reflects Fitch's current appraisal of
the degree of assurance of timely payment of such debt. An appraisal
results in the rating of an issuer's paper as F-1, F-2, F-3, or F-4.
F-1 -- This designation indicates that the commercial paper is
regarded as having the strongest degree of assurance for timely payment.
Duff & Phelps, Inc. ("Duff & Phelps"):
Duff & Phelps' short-term ratings are consistent with the rating
criteria utilized by money market participants. The ratings apply to all
obligations with maturities of under one year including commercial paper,
the uninsured portion of certificates of deposit, unsecured bank loans,
master notes, bankers' acceptances, irrevocable letters of credit, and
current maturities of long-term debt. Asset-backed commercial paper is
also rated according to this scale.
Emphasis is placed on liquidity which is defined as not only cash
from operations, but also access to alternative sources of funds including
trade credit, bank lines, and the capital markets. An important
consideration is the level of an obligor's reliance on short-term funds on
an ongoing basis.
The distinguishing feature of Duff & Phelps' short-term ratings is
the refinement of the traditional "1" category. The majority of short-
term debt issuers carry the highest rating, yet quality differences exist
within that tier. As a consequence, Duff & Phelps has incorporated
gradations of "1+" (one plus) and "1-" (one minus) to assist investors in
recognizing those differences.
Duff l+ -- Highest certainty of timely payment. Short-term liquidity,
including internal operating factors and/or access to alternative sources
of funds, is outstanding, and safety is just below risk-free U.S. Treasury
short-term obligations.
Duff 1 -- Very high certainty of timely payment. Liquidity factors
are excellent and supported by good fundamental protection factors. Risk
factors are minor.
Duff 1- -- High certainty of timely payment. Liquidity factors are
strong and supported by good fundamental protection factors. Risk factors
are very small.
IBCA, Inc. ("IBCA"):
In addition to conducting a careful review of an institution's
reports and published figures, IBCA's analysts regularly visit the
companies for discussions with senior management. These meetings are
fundamental to the preparation of individual reports and ratings. To keep
abreast of any changes that may affect assessments, analysts maintain
contact throughout the year with the management of the companies they
cover.
IBCA's analysts speak the languages of the countries they cover,
which is essential to maximize the value of their meetings with management
and to properly analyze a company's written materials. They also have a
thorough knowledge of the laws and accounting practices that govern the
operations and reporting of companies within the various countries.
Often, in order to ensure a full understanding of their position,
companies entrust IBCA with confidential data. While these data cannot be
disclosed in reports, they are taken into account when assigning IBCA's
ratings. Before dispatch to subscribers, a draft of the report is
submitted to each company to permit correction of any factual errors and
to enable clarification of issues raised.
IBCA's Rating Committees meet at regular intervals to review all
ratings and to ensure that individual ratings are assigned consistently
for institutions in all the countries covered. Following the Committee
meetings, ratings are issued directly to subscribers. At the same time,
the company is informed of the ratings as a matter of courtesy, but not
for discussion.
A1+ -- Obligations supported by the highest capacity for timely
repayment.
A1 -- Obligations supported by a very strong capacity for timely
repayment.
<TABLE>
<CAPTION>
DREYFUS DISCIPLINED INTERMEDIATE BOND FUND
STATEMENT OF INVESTMENTS APRIL 30, 1996 (UNAUDITED)
PRINCIPAL
BONDS AND NOTES-97.4% AMOUNT VALUE
______ ______
<S> <C> <C>
AEROSPACE-.3% AMR,
Deb., 9%, 2012.................. $ 100,000 $ 106,632
____________
BANKING-1.7% First Union National Bank of North Carolina,
Sub. Notes, 6.18%, 2006......... 500,000 (a) 462,574
Fleet Financial Group,
Sub. Notes, 67/8%, 2003......... 150,000 147,752
____________
610,326
____________
COLLATERALIZED MORTGAGE
OBLIGATIONS-1.4% Countrywide Funding,
Mortgage Pass-Through Ctfs.,
Ser. 1994-10, Cl. A-5, 6%, 2009. 161,402 155,183
Home Mac Mortgage Securities,
Collateralized Mortgage Obligations,
Ser. 1986-5, Cl. C, 8.55%, 2008. 10,909 11,097
Residential Funding Mortgage Securities I,
Mortgage Pass-Through Ctfs.,
Ser. 1994-S10, Cl. A-6, 61/2%, 2009 389,824 371,580
____________
537,860
____________
COMMERCIAL MORTGAGE
OBLIGATIONS-1.9% Asset Securitization,
Commercial Mortgage Pass-Through Ctfs.,
Ser. 1995-MD IV, Cl. A-1, 7.10%, 2029 720,433 709,176
____________
CONSUMER-2.6% News America Holdings,
Gtd. Sr. Notes, 81/2%, 2005..... 895,000 943,670
____________
ENTERTAINMENT-3.4% Walt Disney,
Sr. Notes, 63/8%, 2001.......... 1,250,000 1,230,626
____________
FINANCE-10.4% Associates Corp. of North America,
Sr. Deb., 8.55%, 1999........... 675,000 (b) 743,784
First Colony,
Sr. Notes, 65/8%, 2003.......... 500,000 482,615
General Electric Capital,
Notes, 83/4%, 2007.............. 750,000 838,729
Health and Rehabilitation Properties Trust,
Sr. Floating-Rate Notes,
Ser. A, 6.5852%, 1999........... 300,000 (c) 298,769
NYNEX Capital Funding,
Gtd. Medium-Term Notes, 7.63%, 1999 100,000 (d,e) 105,458
Norwest,
Medium-Term Notes, Ser. G,
63/8%, 2002..................... 400,000 389,075
Salomon :
Medium-Term Floating-Rate Notes,
Ser. D, 5.799%, 1999 830,000 (c) 818,737
Sr. Notes, 71/8%, 1999.......... 120,000 119,859
____________
3,797,026
____________
DREYFUS DISCIPLINED INTERMEDIATE BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1996 (UNAUDITED)
PRINCIPAL
BONDS AND NOTES (CONTINUED) AMOUNT VALUE
______ ______
FINANCE/ASSET BACKED-4.4% NationsBank Auto Grantor Trust 1995-A,
Asset Backed Ctfs., Cl. A, 5.85%, 2002 $ 123,242 $ 121,892
Standard Credit Card Master Trust I,
Credit Card Participation Ctfs.,
Ser. 1995-1, Cl. A, 81/4%, 2007. 450,000 481,694
WFS Financial Owner Trust,
Auto Receivable Backed Notes,
Ser. 1996-A, Cl. A-3, 6.05%, 2000 1,000,000 992,550
____________
1,596,136
____________
INDUSTRIAL-.6% Coastal,
Sr. Deb., 93/4%, 2003........... 100,000 113,111
Hoechst Celanese,
Notes, 61/8%, 2004.............. 100,000 93,875
____________
206,986
____________
FOREIGN-6.0% ABN AMRO Bank N.V.,
Sub. Notes, 71/4%, 2005......... 485,000 484,555
Hanson Overseas B.V.,
Gtd. Sr. Notes, 73/8%, 2003..... 500,000 502,929
KfW International Finance,
Gtd. Notes, 91/8%, 2001......... 310,000 341,383
Midland Bank plc,
Sub. Notes, 7.65%, 2007......... 425,000 (f) 438,053
Royal Bank of Scotland Group plc.,
Sub. Notes, 63/8%, 2011......... 500,000 446,250
____________
2,213,170
____________
U.S. GOVERNMENT
AND AGENCIES-64.7% Federal Home Loan Mortgage Corp.:
6.42%, 12/1/2005................ 179,399 170,765
Multiclass Mortgage Participation Ctfs.:
Ser. 1453, Cl. S, 6.9725%, 2000 574,683 (g) 561,753
Ser. 1279, Cl. PH, 71/4%, 2020 400,000 397,120
Federal National Mortgage Association:
6%, 10/1/2010-1/1/2011.......... 1,045,258 990,383
6%, 11/1/2025-3/1/2026.......... 1,624,539 1,480,862
61/2%, 12/1/2002................ 246,710 242,931
7%, 7/1/2000.................... 980,000 980,304
71/2%, 8/1/2025-9/1/2025........ 1,382,876 1,367,748
Real Estate Mortgage Investment
Conduit Trust, Pass-Through Ctfs.
(collateralized by FNMA
Pass-Through Ctfs.):
Ser. 1992-98, Cl. PM, 8%,2021... 500,000 504,230
Ser. 235, Cl. 2, 8%, 8/1/2023
(Interest Only Obligation)...... (h) 118,723
Series 1989-43, Cl. E, Zero Coupon,
10/25/2017
(Principal Only Obligation) (i) 198,000
DREYFUS DISCIPLINED INTERMEDIATE BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1996 (UNAUDITED)
PRINCIPAL
BONDS AND NOTES (CONTINUED) AMOUNT VALUE
______ ______
U.S. GOVERNMENT
AND AGENCIES (CONTINUED) Government National Mortgage Association I:
61/2%, 10/15/2023............... $ 706,999 $ 662,148
71/2%, 6/15/2024-1/15/2026...... 1,272,062 1,257,751
8%, 5/15/2022-1/15/2026......... 2,322,211 2,353,751
91/2%, 4/15/2018................ 62,465 66,936
Government National Mortgage Association II:
6%, 1/20/2024-11/20/2025........ 413,983 415,903
U.S. Treasury Bonds,
71/8%, 2/15/2023................ 925,000 930,203
U.S. Treasury Notes:
5%, 2/15/1999................... 5,000,000 4,851,562
63/8%, 8/15/2002................ 4,500,000 4,465,547
61/2%, 5/15/2005................ 1,700,000 1,677,688
____________
23,694,308
____________
TOTAL BONDS AND NOTES
(cost $36,552,967).............. $35,645,916
==============
SHORT-TERM INVESTMENTS-3.2%
REPURCHASE AGREEMENT; Salomon Brothers, 5.32%
Dated 4/30/1996, due 5/1/1996 in the
amount of $1,159,171 (fully collateralized
by $1,126,000 U.S.Treasury Notes,
71/4%, 8/15/2004 value $1,200,358)
(cost $1,159,000)............... $1,159,000 $ 1,159,000
==============
TOTAL INVESTMENTS (cost $37,711,968).................................... 100.6% $36,804,916
========= ==============
LIABILITES, LESS CASH AND RECEIVABLES.................................... (.6%) $ (202,424)
========= ==============
NET ASSETS ................................................................. 100.0% $36,602,492
========= ==============
NOTES TO STATEMENT OF INVESTMENTS:
(a) Reflects date security can be redeemed at holders' option; the stated
maturity date is 2/15/2036.
(b) Reflects date security can be redeemed at holders' option; the stated
maturity date is 7/15/2009.
(c) Variable rate security-interest rate subject to periodic change.
(d) Reflects date security can be redeemed at holders' option; the stated
maturity date is 10/15/2009.
(e) Interest rate is 7.63% until 10/15/1999, date on which the interest rate
increases to 8.23% until stated maturity.
(f) Reflects date security can be redeemed at holders' option; the stated
maturity date is 5/1/2025.
(g) Inverse floater security-interest rate subject to periodic change.
(h) Notional face $394,100.
(i) Notional face $360,000.
See notes to financial statements.
DREYFUS DISCIPLINED INTERMEDIATE BOND FUND
STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1996 (UNAUDITED)
ASSETS:
Investments in securities, at value (cost $37,711,968)-see Statement
of Investments (including a repurchase agreement of $1,159,000)....... $36,804,916
Cash.................................................................... 572,327
Interest receivable..................................................... 440,029
Other receivables....................................................... 470
_____________
37,817,742
LIABILITIES:
Due to The Dreyfus Corporation.......................................... $ 28,012
Payable for investment securities purchased............................. 1,062,247
Payable for Capital Stock redeemed...................................... 100,000
Directors' fees payable-Note 2(c)....................................... 795
Other liabilities....................................................... 24,196 1,215,250
__________ ____________
NET ASSETS.................................................................. $36,602,492
==============
REPRESENTED BY:
Paid-in capital......................................................... $37,607,250
Accumulated net realized (loss) on investments.......................... (97,706)
Accumulated net unrealized (depreciation) on investments-Note 3......... (907,052)
_____________
NET ASSETS at value......................................................... $36,602,492
==============
NET ASSET VALUE, per share:
Investor Shares
(100 million shares of $.001 par value Capital Stock authorized)
($1,712,104 3 141,646 shares of Capital Stock outstanding).............. $12.09
========
Class R Shares
(100 million shares of $.001 par value Capital Stock authorized)
($34,890,388 3 2,886,507 shares of Capital Stock outstanding)........... $12.09
========
STATEMENT OF OPERATIONS
FROM NOVEMBER 1, 1995 (COMMENCEMENT OF OPERATIONS) TO APRIL 30, 1996 (UNAUDITED)
INVESTMENT INCOME:
INTEREST INCOME......................................................... $ 546,760
EXPENSES:
Management fee-Note 2(a).............................................. $ 45,976
Distribution fees-Note 2(b)........................................... 2,078
Directors' fees and expenses-Note 2(c)................................ 795
__________
TOTAL EXPENSES................................................... 48,849
___________
INVESTMENT INCOME-NET............................................. 497,911
REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS-Note 3:
Net realized (loss) on investments...................................... $ (97,706)
Net unrealized (depreciation) on investments............................ (907,052)
__________
NET REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS................. (1,004,758)
___________
NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS...................... $ (506,847)
==============
See notes to financial statements.
DREYFUS DISCIPLINED INTERMEDIATE BOND FUND
STATEMENT OF CHANGES IN NET ASSETS
FROM NOVEMBER 1, 1995 (COMMENCEMENT OF OPERATIONS) TO APRIL 30, 1996 (UNAUDITED)
OPERATIONS:
Investment income-net................................................................ $ 497,911
Net realized (loss) on investments................................................... (97,706)
Net unrealized (depreciation) on investments for the period.......................... (907,052)
_____________
NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS........................... (506,847)
____________
DIVIDENDS TO SHAREHOLDERS FROM;
Investment income-net:
Investor Shares.................................................................... (45,445)
Class R Shares..................................................................... (452,466)
____________
TOTAL DIVIDENDS.................................................................. (497,911)
_____________
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold:
Investor Shares.................................................................... 1,860,482
Class R Shares..................................................................... 38,538,427
Dividends reinvested:
Investor Shares.................................................................... 43,192
Class R Shares..................................................................... 267,053
Cost of shares redeemed:
Investor Shares.................................................................... (132,223)
Class R Shares..................................................................... (2,969,681)
_____________
INCREASE IN NET ASSETS FROM CAPITAL STOCK TRANSACTIONS........................... 37,607,250
_____________
TOTAL INCREASE IN NET ASSETS................................................... 36,602,492
NET ASSETS:
Beginning of period.................................................................. -
_____________
End of period........................................................................ $36,602,492
============
</TABLE>
<TABLE>
<CAPTION>
SHARES
______________________________________
INVESTOR SHARES CLASS R SHARES
_______________ _______________
<S> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold.......................................................... 148,708 3,104,817
Shares issued for dividends reinvested............................... 3,474 21,683
Shares redeemed...................................................... (10,536) (239,993)
_______________ _______________
NET INCREASE IN SHARES OUTSTANDING............................... 141,646 2,886,507
============== ===============
See notes to financial statements.
</TABLE>
DREYFUS DISCIPLINED INTERMEDIATE BOND FUND
FINANCIAL HIGHLIGHTS (UNAUDITED)
Reference is made to pages 5 and 6 of the Fund's Prospectus dated
July 1, 1996.
See notes to financial statements.
(1) From December 29, 1993 (commencement of operations) to October 31, 1994.
(2) Not annualized.
See notes to financial statements.
DREYFUS DISCIPLINED INTERMEDIATE BOND FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
The Dreyfus/Laurel Funds, Inc. (the "Company") is registered under the
Investment Company Act of 1940 ("Act") as a
diversified open-end management investment company and operates as a series
company currently offering seventeen Series including the Dreyfus Disciplined
Intermediate Bond Fund (the "Fund") which commenced operations on November 1,
1995. The Fund's investment objective is to outperform the Lehman Brothers
Aggregate Bond Index, while maintaining a similar level of risk, by investing
primarily in domestic and foreign investment-grade debt securities and by
actively managing bond market and maturity exposure. The Dreyfus Corporation
("Manager") serves as the Fund's investment adviser. The Manager is a direct
subsidiary of Mellon Bank, N.A.
Premier Mutual Fund Services, Inc. (the "Distributor") acts as the
distributor of the Fund's shares, which are sold to the public without a
sales charge. The Fund is currently authorized to issue two classes of
shares: Investor shares and Class R shares. Investor shares are sold
primarily to retail investors and bear a distribution fee. Class R shares are
sold primarily to bank trust departments and other financial service
providers (including Mellon Bank and its affiliates) acting on behalf of
customers having a qualified trust or investment account or relationship at
such institution, and bear no distribution fee. Each class of shares has
identical rights and privileges, except with respect to the distribution fee
and voting rights on matters affecting a single class.
Investment income, net of expenses (other than class specific
expenses), realized and unrealized gains and losses are allocated daily to
each class of shares based upon the relative proportion of net assets of each
class.
(A) PORTFOLIO VALUATION: The Fund's investments (excluding short-term
investments and U.S. Government obligations) are valued each business day by
an independent pricing service ("Service") approved by the Board of
Directors. Investments for which quoted bid prices are readily available and
are representative of the bid side of the market in the judgment of the
Service are valued at the mean between the quoted bid prices (as obtained by
the Service from dealers in such securities) and asked prices (as calculated
by the Service based upon its evaluation of the market for such securities).
Other investments (which constitute a majority of the portfolio securities)
are carried at fair value as determined by the Service, based on methods
which include consideration of: yields or prices of securities of comparable
quality, coupon, maturity and type; indications as to values from dealers;
and general market conditions. Securities for which there are no such
valuations are valued at fair value as determined in good faith under the dire
ction of the Board of Directors. Investments in U.S. Government obligations
are valued at the mean between quoted bid and asked prices. Short-term
investments are carried at amortized cost, which approximates value.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities
transactions are recorded on a trade date basis. Realized gain and loss from
securities transactions are recorded on the identified cost basis. Interest
income, including, where applicable, amortization of discount on investments,
is recognized on the accrual basis.
(C) REPURCHASE AGREEMENTS: The Fund may engage in repurchase
agreement transactions. Under the terms of a typical repurchase agreement,
the Fund, through its custodian, takes possession of an underlying debt
obligation subject to an obligation of the seller to repurchase, and the Fund
to resell, the obligation at an agreed-upon price and time, thereby
determining the yield during the Fund's
DREYFUS DISCIPLINED INTERMEDIATE BOND FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
holding period. This arrangement results in a fixed rate of return
that is not subject to market fluctuations during the Fund's holding period.
The value of the collateral is at least equal, at all times, to the total
amount of the repurchase obligation, including interest. In the event of a
counterparty default, the Fund has the right to use the collateral to offset
losses incurred. There is potential loss to the Fund in the event the Fund is
delayed or prevented from exercising its rights to dispose of the collateral
securities, including the risk of a possible decline in the value of the
underlying securities during the period while the Fund seeks to assert its
rights. The Fund's manager, acting under the supervision of the Board of
Directors, reviews the value of the collateral and the creditworthiness of
those banks and dealers with which the Fund enters into repurchase agreements
to evaluate potential risks.
(D) DIVIDENDS TO SHAREHOLDERS: It is the policy of the Fund to
declare dividends daily from investment income-net. Such dividends are paid
monthly. Dividends from net realized capital gain, if any, are normally
declared and paid annually, but the Fund may make distributions on a more
frequent basis to comply with the distribution requirements of the Internal
Revenue Code. To the extent that net realized capital gain can be offset by
capital loss carryovers, if any, it is the policy of the Fund not to
distribute such gain.
(E) FEDERAL INCOME TAXES: It is the policy of the Fund to qualify as
a regulated investment company, if such qualification is in the best
interests of its shareholders, by complying with the applicable provisions of
the Internal Revenue Code, and to make distributions of taxable income
sufficient to relieve it from substantially all Federal income and excise
taxes.
NOTE 2-INVESTMENT MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) INVESTMENT MANAGEMENT FEE: Pursuant to an Investment Management
agreement with the Manager, the Manager provides or arranges for one or more
third parties and or affiliates to provide investment advisory,
administrative, custody, fund accounting and transfer agency services to the
Fund. The Manager also directs the investments of the Fund in accordance with
its investment objective, policies and limitations. For these services, the
Fund is contractually obligated to pay the Manager a fee, calculated daily
and paid monthly, at the annual rate of .55% of the value of the Fund's
average daily net assets. Out of its fee, the Manager pays all of the
expenses of the Fund except brokerage fees, taxes, interest, Rule 12b-1
distribution fees and expenses, fees and expenses of non-interested Directors
(including counsel fees) and extraordinary expenses. In addition, the Manager
is required to reduce its fee in an amount equal to the Fund's allocable
portion of fees and expenses of the non-interested Directors (including
counsel).
(B) DISTRIBUTION PLAN: The Fund has adopted a distribution plan (the
"Plan") pursuant to Rule 12b-1 under the 1940 Act relating to its Investor
shares. Under the Plan, the Fund may pay annually up to .25% of the value of
the average daily net assets attributable to its Investor shares to
compensate the Distributor and Dreyfus Service Corporation, an affiliate of
the Manager, for shareholder servicing activities and the Distributor for
activities primarily intended to result in the sale of Investor shares. The
Class R shares bear no distribution fee. For the period ended April 30, 1996,
the distribution fee for the Investor shares was $2,078.
Under its terms, the Plan shall remain in effect from year to year,
provided such continuance is approved annually by a vote of majority of those
Directors who are not "interested persons" of the
DREYFUS DISCIPLINED INTERMEDIATE BOND FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
Company and who have no direct or indirect financial interest in the
operation of the Plan or in any agreement related to the Plan.
(C) DIRECTORS' FEES: Each director who is not an "interested person"
as defined in the Act receives $27,000 per year, $1,000 for each Board
meeting attended and $750 for each Audit Committee meeting attended and is
reimbursed for travel and out-of-pocket expenses. These expenses are paid in
total by the following funds: The Dreyfus/Laurel Funds, Inc., The
Dreyfus/Laurel Tax-Free Municipal Funds, and The Dreyfus/Laurel Funds Trust.
In addition, the Chairman of the Board receives an annual fee of $75,000 per
year. These fees and expenses are charged and allocated to each series based
on net assets.
NOTE 3-SECURITIES TRANSACTIONS:
The aggregate amount of purchase and sales of investment securities,
excluding short-term securities, during the period ended April 30, 1996,
amounted to $54,712,252 and $18,066,310, respectively.
At April 30, 1996, accumulated net unrealized depreciation on
investments was $907,052, consisting of $29,913 gross unrealized appreciation
and $936,965 gross unrealized depreciation.
At April 30, 1996, the cost of investments for Federal income tax
purposes was substantially the same as the cost for financial reporting
purposes (see the Statement of Investments).
THE DREYFUS/LAUREL FUNDS, INC.
(formerly, The Laurel Funds, Inc.)
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
Included in Part A:
Financial Highlights for each of the periods indicated.
Included in Part B:
The following are incorporated by reference to the Registrant's
Annual Reports to Shareholders for the period ended October 31,
1995 filed on January 10, 1996.
- Report of Independent Auditors
- Portfolio of Investments
- Statements of Assets and Liabilities
- Statements of Operations
- Statements of Changes in Net Assets
- Notes to Financial Statements
(b) Exhibits:
1(a) Articles of Incorporation dated July 31, 1987. Filed
herewith.
1(b) Articles Supplementary dated October 15, 1993 increasing
authorized capital stock. Incorporated by reference to
Post-Effective Amendment No. 39 to the Registrant's
Registration Statement on Form N-1A ("Post-Effective
Amendment No. 39") filed on September 22, 1995.
1(c) Articles of Amendment dated March 31, 1994. Filed
herewith.
1(d) Articles Supplementary dated March 31, 1994 reclassifying
shares. Filed herewith.
1(e) Articles Supplementary dated May 24, 1994 designating and
classifying shares. Incorporated by reference to Post-
Effective Amendment No. 39.
1(f) Articles of Amendment dated October 17, 1994. Incorporated
by reference to Post-Effective Amendment No. 31 filed on
December 13, 1994.
1(g) Articles Supplementary dated December 19, 1994 designating
classes. Incorporated by reference to Post-Effective
Amendment No. 32 filed on December 19, 1994.
1(h) Articles of Amendment dated June 9, 1995. Incorporated by
reference to Post-Effective Amendment No. 39.
1(i) Articles of Amendment dated August 30, 1995. Incorporated
by reference to Post-Effective Amendment No. 39.
1(j) Articles Supplementary dated August 31, 1995 reclassifying
shares. Incorporated by reference to Post-Effective
Amendment No. 39.
1(k) Articles of Amendment dated October 31, 1995 designating and
classifying shares. Filed herewith.
1(1) Articles of Amendment dated November 22, 1995 designating
and reclassifying shares filed herewith.
2 Bylaws. Incorporated by reference to Pre-Effective
Amendment No. 1 to the Registrant's Registration Statement
on Form N-1A filed on August 6, 1987 -- Registration No.
33-16338 ("Registration Statement").
3 Not Applicable.
4 Specimen security. To be filed by amendment.
5(a) Investment Sub-Advisory Agreement among Mellon Bank, N.A.,
S.A.M. Finance S.A. and the Registrant for the European
Fund. Incorporated by reference to Post-Effective Amendment
No. 22 filed on September 3, 1993.
5(b) Investment Management Agreement between Mellon Bank, N.A.
and the Registrant. Filed herewith.
5(c) Investment Sub-Advisory Agreement among Mellon Bank, N.A.,
S.A.M. Finance S.A. and the Registrant for the International
Equity Allocation Fund. Incorporated by reference to
Post-Effective Amendment No. 31 filed on December 13, 1994.
5(d) Assignment and Assumption Agreement among Mellon Bank, N.A.,
The Dreyfus Corporation and the Registrant (relating to
Investment Management Agreement). Incorporated by reference
to Post-Effective Amendment No. 31 filed on December 13,
1994.
5(e) Assignment Agreement among Mellon Bank, N.A., The Dreyfus
Corporation, S.A.M. Finance S.A. and the Registrant
(relating to Investment Sub-Advisory Agreement for the
European Fund). To be filed by amendment.
5(f) Assignment Agreement among Mellon Bank, N.A., The Dreyfus
Corporation, S.A.M. Finance S.A. and the Registrant
(relating to Investment Sub-Advisory Agreement for the
International Equity Allocation Fund). To be filed by
amendment.
6 Distribution Agreement between Premier Mutual Fund Services,
Inc. and the Registrant. Incorporated by reference to
Post-Effective Amendment No. 31 filed on December 13, 1994.
7 Not Applicable.
8(a) Custody Agreement with Boston Safe Deposit and Trust Company
with respect to the European Fund. Incorporated by
reference to Post-Effective Amendment No. 23 filed on
December 30, 1993.
8(b) Custody Agreement between the Registrant and Mellon Bank,
N.A. Filed herewith.
8(c) Supplement to Custody Agreement with Boston Safe Deposit and
Trust Company with respect to the European Fund.
Incorporated by reference to Post-Effective Amendment No. 29
filed on May 19, 1994.
8(d) Custody Agreement with Boston Safe Deposit and Trust Company
with respect to the International Equity Allocation Fund.
To be filed by amendment.
8(e) Sub-Custodian Agreement between Mellon Bank, N.A. and Boston
Safe Deposit and Trust Company. Filed herewith.
10 Opinion of counsel is incorporated by reference to the
Registration Statement and to Post-Effective Amendment No.
32 filed on December 19, 1994. Consent of counsel is filed
herewith.
11 Not Applicable.
12 Not Applicable.
13 Letter of Investment Intent. Incorporated by reference to
the Registration Statement.
14 Not Applicable.
15(a) Restated Distribution Plan (relating to Investor Shares and
Class A Shares). Incorporated by reference to
Post-Effective Amendment No. 31 filed on December 13, 1994.
15(b) Form of Distribution and Service Plans (relating to Class B
Shares and Class C Shares). Incorporated by reference to
Post-Effective Amendment No. 32 filed on December 19, 1994.
16 Schedule for Computation of Performance Calculation for
Dreyfus Disciplined Intermediate Bond Fund is incorporated
by reference to Post-Effective amendment No. 44 filed on
April 30, 1996. Schedule for Computation of Performance
Calculation for other funds is also incorporated by
reference to Post-Effective Amendment No. 26 filed on March
1, 1994.
18 Rule 18f-3 Plans dated April 26, 1995. Incorporated by
reference to Post-Effective Amendment No. 36 filed on May
16, 1995.
25 Powers of Attorney of the Directors and Officers dated April
5, 1995. Incorporated by reference to Post-Effective
Amendment No. 35 filed on April 7, 1995.
Item 25. Persons Controlled by or Under Common Control with Registrant
Not Applicable.
Item 26. Number of Holders of Securities
Set forth below are the number of recordholders of securities of the
Registrant as of June 6, 1996:
Number of Record Holders
Investor
Title of Class Class Class R
Dreyfus Disciplined Intermediate Bond Fund 10 236
Item 27. Indemnification
Incorporated by reference to Registration Statement.
Item 28. Business and Other Connections of Investment Adviser
The Dreyfus Corporation ("Dreyfus") and subsidiary companies comprise
a financial service organization whose business consists primarily of
providing investment management services as the investment adviser, manager
and distributor for sponsored investment companies registered under the
Investment Company Act of 1940, as amended, and as an investment adviser to
institutional and individual accounts. Dreyfus also serves as
sub-investment adviser to and/or administrator of other investment
companies. Dreyfus Service Corporation, a wholly-owned subsidiary of
Dreyfus, serves primarily as a registered broker-dealer of shares of
investment companies sponsored by Dreyfus and of other investment companies
for which Dreyfus acts as investment adviser, sub-investment adviser or
administrator. Dreyfus Management, Inc., another wholly-owned subsidiary,
provides investment management services to various pension plans,
institutions and individuals.
Item 28. Business and Other Connections of Investment Adviser (continued)
________ ________________________________________________________________
Officers and Directors of Investment Adviser
____________________________________________
Name and Position
with Dreyfus Other Businesses
_________________ ________________
MANDELL L. BERMAN Real estate consultant and private investor
Director 29100 Northwestern Highway, Suite 370
Southfield, Michigan 48034;
Past Chairman of the Board of Trustees:
Skillman Foundation;
Member of The Board of Vintners Intl.
FRANK V. CAHOUET Chairman of the Board, President and
Director Chief Executive Officer:
Mellon Bank Corporation****;
Mellon Bank, N.A.****
Director:
Avery Dennison Corporation
150 North Orange Grove Boulevard
Pasadena, California 91103;
Saint-Gobain Corporation
750 East Swedesford Road
Valley Forge, Pennsylvania 19482;
Teledyne, Inc.
1901 Avenue of the Stars
Los Angeles, California 90067
ALVIN E. FRIEDMAN Senior Adviser to Dillon, Read & Co. Inc.
Director 535 Madison Avenue
New York, New York 10022;
Director and Member of the Executive
Committee of Avnet, Inc.**
LAWRENCE M. GREENE Director:
Director Dreyfus America Fund
JULIAN M. SMERLING None
Director
HOWARD STEIN Chairman of the Board:
Chairman of the Board and Dreyfus Acquisition Corporation*;
Chief Executive Officer The Dreyfus Consumer Credit Corporation*;
Dreyfus Management, Inc.*;
Dreyfus Service Corporation*;
Chairman of the Board and Chief Executive
Officer:
Major Trading Corporation*;
Director:
Avnet, Inc.**;
Dreyfus America Fund++++;
The Dreyfus Fund International
Limited+++++;
World Balanced Fund+++;
Dreyfus Partnership Management,
Inc.*;
Dreyfus Personal Management, Inc.*;
Dreyfus Precious Metals, Inc.*;
Dreyfus Service Organization, Inc.***;
Seven Six Seven Agency, Inc.*;
Trustee:
Corporate Property Investors
New York, New York
W. KEITH SMITH Chairman and Chief Executive Officer:
Vice Chairman of the Board The Boston Company*****;
Vice Chairman of the Board:
Mellon Bank Corporation****;
Mellon Bank, N.A.****;
Director:
Dentsply International, Inc.
570 West College Avenue
York, Pennsylvania 17405
CHRISTOPHER M. CONDRON Vice Chairman:
President, Chief Mellon Bank Corporation****;
Operating Officer The Boston Company*****;
and a Director Deputy Director:
Mellon Trust****;
Chief Executive Officer:
The Boston Company Asset Management,
Inc.*****;
President:
Boston Safe Deposit and Trust Company*****
STEPHEN E. CANTER Director:
Vice Chairman and The Dreyfus Trust Company++;
Chief Investment Officer, Formerly, Chairman and Chief Executive Officer:
and a Director Kleinwort Benson Investment Management
Americas Inc.*
LAWRENCE S. KASH Chairman, President and Chief
Vice Chairman-Distribution Executive Officer:
and a Director The Boston Company Advisors, Inc.
53 State Street
Exchange Place
Boston, Massachusetts 02109
Executive Vice President and Director:
Dreyfus Service Organization, Inc.***;
Director:
The Dreyfus Consumer Credit Corporation*;
The Dreyfus Trust Company++;
Dreyfus Service Corporation*;
President:
The Boston Company*****;
Laurel Capital Advisors****;
Boston Group Holdings, Inc.;
Executive Vice President:
Mellon Bank, N.A.****;
Boston Safe Deposit and Trust
Company*****;
PHILIP L. TOIA Chairman of the Board and Trust Investment
Vice Chairman-Operations Officer:
and Administration The Dreyfus Trust Company++;
and a Director Chairman of the Board and Chief Operating
Officer:
Major Trading Corporation*;
Chairman and Director:
Dreyfus Transfer, Inc.
One American Express Plaza
Providence, Rhode Island 02903
Director:
Dreyfus Precious Metals, Inc.*;
Dreyfus Service Corporation*;
Seven Six Seven Agency, Inc.*;
President and Director:
Dreyfus Acquisition Corporation*;
The Dreyfus Consumer Credit Corporation*;
Dreyfus-Lincoln, Inc.*;
Dreyfus Management, Inc.*;
Dreyfus Personal Management, Inc.*;
Dreyfus Partnership Management, Inc.+;
Dreyfus Service Organization, Inc.***;
The Truepenny Corporation*;
Formerly, Senior Vice President:
The Chase Manhattan Bank, N.A. and
The Chase Manhattan Capital Markets
Corporation
One Chase Manhattan Plaza
New York, New York 10081
WILLIAM T. SANDALLS, JR. Director:
Senior Vice President and Dreyfus Partnership Management, Inc.*;
Chief Financial Officer Seven Six Seven Agency, Inc.*;
President and Director:
Lion Management, Inc.*;
Executive Vice President and Director:
Dreyfus Service Organization, Inc.*;
Vice President, Chief Financial Officer and
Director:
Dreyfus Acquisition Corporation*;
Vice President and Director:
The Dreyfus Consumer Credit Corporation*;
The Truepenny Corporation*;
Treasurer, Financial Officer and Director:
The Dreyfus Trust Company++;
Treasurer and Director:
Dreyfus Management, Inc.*;
Dreyfus Personal Management, Inc.*;
Dreyfus Service Corporation*;
Major Trading Corporation*;
Formerly, President and Director:
Sandalls & Co., Inc.
BARBARA E. CASEY President:
Vice President- Dreyfus Retirement Services Division;
Dreyfus Retirement Executive Vice President:
Services Boston Safe Deposit & Trust Co.*****
Dreyfus Service Corporation*
ELIE M. GENADRY President:
Vice President- Institutional Services Division of Dreyfus
Institutional Sales Service Corporation*;
Broker-Dealer Division of Dreyfus Service
Corporation*;
Group Retirement Plans Division of Dreyfus
Service Corporation;
Executive Vice President:
Dreyfus Service Corporation*;
Dreyfus Service Organization, Inc.***;
Vice President:
The Dreyfus Trust Company++
WILLIAM F. GLAVIN, JR. Executive Vice President:
Vice President-Corporate Dreyfus Service Corporation*;
Development Senior Vice President:
The Boston Company Advisors, Inc.
53 State Street
Exchange Place
Boston, Massachusetts 02109
MARK N. JACOBS Vice President, Secretary and Director:
Vice President- Lion Management, Inc.*;
General Counsel Secretary:
and Secretary The Dreyfus Consumer Credit Corporation*;
Dreyfus Management, Inc.*;
Assistant Secretary:
Dreyfus Service Organization, Inc.***;
Major Trading Corporation*;
The Truepenny Corporation*
PATRICE M. KOZLOWSKI None
Vice President-
Corporate Communications
MARY BETH LEIBIG None
Vice President-
Human Resources
JEFFREY N. NACHMAN President and Director:
Vice President-Mutual Fund Dreyfus Transfer, Inc.
Accounting One American Express Plaza
Providence, Rhode Island 02903
ANDREW S. WASSER Vice President:
Vice President-Information Mellon Bank Corporation****
Services
MAURICE BENDRIHEM Treasurer:
Controller Dreyfus Partnership Management, Inc.*;
Dreyfus Precious Metals, Inc.*;
Dreyfus Service Organization, Inc.***;
Seven Six Seven Agency, Inc.*;
The Truepenny Corporation*;
Controller:
Dreyfus Acquisition Corporation*;
Dreyfus Service Corporation*;
The Dreyfus Trust Company++;
The Dreyfus Consumer Credit Corporation*;
Formerly, Vice President-Financial Planning,
Administration and Tax:
Showtime/The Movie Channel, Inc.
1633 Broadway
New York, New York 10019
ELVIRA OSLAPAS Assistant Secretary:
Assistant Secretary Dreyfus Service Corporation*;
Dreyfus Management, Inc.*;
Dreyfus Acquisition Corporation, Inc.*;
The Truepenny Corporation+
______________________________________
* The address of the business so indicated is 200 Park Avenue, New
York, New York 10166.
** The address of the business so indicated is 80 Cutter Mill Road,
Great Neck, New York 11021.
*** The address of the business so indicated is 131 Second Street, Lewes,
Delaware 19958.
**** The address of the business so indicated is One Mellon Bank Center,
Pittsburgh, Pennsylvania 15258.
***** The address of the business so indicated is One Boston Place, Boston,
Massachusetts 02108.
+ The address of the business so indicated is Atrium Building, 80 Route
4 East, Paramus, New Jersey 07652.
++ The address of the business so indicated is 144 Glenn Curtiss
Boulevard, Uniondale, New York 11556-0144.
+++ The address of the business so indicated is One Rockefeller Plaza,
New York, New York 10020.
++++ The address of the business so indicated is 2 Boulevard Royal,
Luxembourg.
+++++ The address of the business so indicated is Nassau, Bahama Islands.
Item 29. Principal Underwriters
________ ______________________
(a) Other investment companies for which Registrant's principal
underwriter (exclusive distributor) acts as principal underwriter or
exclusive distributor:
1) Comstock Partners Strategy Fund, Inc.
2) Dreyfus A Bonds Plus, Inc.
3) Dreyfus Appreciation Fund, Inc.
4) Dreyfus Asset Allocation Fund, Inc.
5) Dreyfus Balanced Fund, Inc.
6) Dreyfus BASIC GNMA Fund
7) Dreyfus BASIC Money Market Fund, Inc.
8) Dreyfus BASIC Municipal Fund, Inc.
9) Dreyfus BASIC U.S. Government Money Market Fund
10) Dreyfus California Intermediate Municipal Bond Fund
11) Dreyfus California Tax Exempt Bond Fund, Inc.
12) Dreyfus California Tax Exempt Money Market Fund
13) Dreyfus Capital Value Fund, Inc.
14) Dreyfus Cash Management
15) Dreyfus Cash Management Plus, Inc.
16) Dreyfus Connecticut Intermediate Municipal Bond Fund
17) Dreyfus Connecticut Municipal Money Market Fund, Inc.
18) Dreyfus Florida Intermediate Municipal Bond Fund
19) Dreyfus Florida Municipal Money Market Fund
20) The Dreyfus Fund Incorporated
21) Dreyfus Global Bond Fund, Inc.
22) Dreyfus Global Growth Fund
23) Dreyfus GNMA Fund, Inc.
24) Dreyfus Government Cash Management
25) Dreyfus Growth and Income Fund, Inc.
26) Dreyfus Growth and Value Funds, Inc.
27) Dreyfus Growth Opportunity Fund, Inc.
28) Dreyfus Income Funds
29) Dreyfus Institutional Money Market Fund
30) Dreyfus Institutional Short Term Treasury Fund
31) Dreyfus Insured Municipal Bond Fund, Inc.
32) Dreyfus Intermediate Municipal Bond Fund, Inc.
33) Dreyfus International Equity Fund, Inc.
34) The Dreyfus/Laurel Funds Trust
35) The Dreyfus/Laurel Tax-Free Municipal Funds
36) Dreyfus Stock Index Fund, Inc.
37) Dreyfus LifeTime Portfolios, Inc.
38) Dreyfus Liquid Assets, Inc.
39) Dreyfus Massachusetts Intermediate Municipal Bond Fund
40) Dreyfus Massachusetts Municipal Money Market Fund
41) Dreyfus Massachusetts Tax Exempt Bond Fund
42) Dreyfus Michigan Municipal Money Market Fund, Inc.
43) Dreyfus Money Market Instruments, Inc.
44) Dreyfus Municipal Bond Fund, Inc.
45) Dreyfus Municipal Cash Management Plus
46) Dreyfus Municipal Money Market Fund, Inc.
47) Dreyfus New Jersey Intermediate Municipal Bond Fund
48) Dreyfus New Jersey Municipal Bond Fund, Inc.
49) Dreyfus New Jersey Municipal Money Market Fund, Inc.
50) Dreyfus New Leaders Fund, Inc.
51) Dreyfus New York Insured Tax Exempt Bond Fund
52) Dreyfus New York Municipal Cash Management
53) Dreyfus New York Tax Exempt Bond Fund, Inc.
54) Dreyfus New York Tax Exempt Intermediate Bond Fund
55) Dreyfus New York Tax Exempt Money Market Fund
56) Dreyfus Ohio Municipal Money Market Fund, Inc.
57) Dreyfus 100% U.S. Treasury Intermediate Term Fund
58) Dreyfus 100% U.S. Treasury Long Term Fund
59) Dreyfus 100% U.S. Treasury Money Market Fund
60) Dreyfus 100% U.S. Treasury Short Term Fund
61) Dreyfus Pennsylvania Intermediate Municipal Bond Fund
62) Dreyfus Pennsylvania Municipal Money Market Fund
63) Dreyfus Short-Intermediate Government Fund
64) Dreyfus Short-Intermediate Municipal Bond Fund
65) Dreyfus Investment Grade Bond Funds, Inc.
66) The Dreyfus Socially Responsible Growth Fund, Inc.
67) Premier Strategic Investing
68) Dreyfus Tax Exempt Cash Management
69) The Dreyfus Third Century Fund, Inc.
70) Dreyfus Treasury Cash Management
71) Dreyfus Treasury Prime Cash Management
72) Dreyfus Variable Investment Fund
73) Dreyfus Worldwide Dollar Money Market Fund, Inc.
74) General California Municipal Bond Fund, Inc.
75) General California Municipal Money Market Fund
76) General Government Securities Money Market Fund, Inc.
77) General Money Market Fund, Inc.
78) General Municipal Bond Fund, Inc.
79) General Municipal Money Market Fund, Inc.
80) General New York Municipal Bond Fund, Inc.
81) General New York Municipal Money Market Fund
82) Dreyfus S&P 500 Index Fund
83) Dreyfus MidCap Index Fund
84) Premier Insured Municipal Bond Fund
85) Premier California Municipal Bond Fund
86) Premier Equity Funds, Inc.
87) Premier Global Investing, Inc.
88) Premier GNMA Fund
89) Premier Growth Fund, Inc.
90) Premier Municipal Bond Fund
91) Premier New York Municipal Bond Fund
92) Premier State Municipal Bond Fund
93) Premier Strategic Growth Fund
(b)
Positions and
Name and principal Positions and offices with offices with
business address the Distributor Registrant
__________________ ___________________________ _____________
Marie E. Connolly+ Director, President, Chief President and
Executive Officer and Compliance Treasurer
Officer
Joseph F. Tower, III+ Senior Vice President, Treasurer Assistant
and Chief Financial Officer Treasurer
John E. Pelletier+ Senior Vice President, General Vice President
Counsel, Secretary and Clerk and Secretary
Frederick C. Dey++ Senior Vice President Vice President
and Assistant
Treasurer
Eric B. Fischman++ Vice President and Associate Vice President
General Counsel and Assistant
Secretary
Paul Prescott+ Vice President None
Elizabeth Bachman++ Assistant Vice President Vice President
and Assistant
Secretary
Mary Nelson+ Assistant Treasurer None
John J. Pyburn++ Assistant Treasurer Assistant
Treasurer
Jean M. O'Leary+ Assistant Secretary and None
Assistant Clerk
John W. Gomez+ Director None
William J. Nutt+ Director None
________________________________
+ Principal business address is One Exchange Place, Boston, Massachusetts
02109.
++ Principal business address is 200 Park Avenue, New York, New York 10166.
Item 30. Location of Accounts and Records
________________________________
1. First Data Investor Services Group, Inc.,
a subsidiary of First Data Corporation
P.O. Box 9671
Providence, Rhode Island 02940-9671
2. The Bank of New York
90 Washington Street
New York, New York 10286
3. Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, Rhode Island 02940-9671
4. The Dreyfus Corporation
200 Park Avenue
New York, New York 10166
Item 31. Management Services
_______ ___________________
Not Applicable
Item 32. Undertakings
________ ____________
(1) To call a meeting of shareholders for the purpose of voting upon
the question of removal of a director or directors when
requested in writing to do so by the holders of at least 10% of
the Registrant's outstanding shares of common stock and in
connection with such meeting to comply with the provisions of
Section 16(c) of the Investment Company Act of 1940 relating to
shareholder communications.
(2) To furnish each person to whom a prospectus is delivered with a
copy of the Fund's latest Annual Report to Shareholders, upon
request and without charge.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, and the Investment Company Act of 1940, as amended, the
Registrant, The Dreyfus/Laurel Funds, Inc. (formerly, The Laurel Funds,
Inc.) certifies that it meets all of the requirements for effectiveness of
this Amendment to the Registration Statement pursuant to Rule 485(b) under
the Securities Act of 1933 and has duly caused this Amendment to the
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York and State of New York on
the 25th day of June, 1996.
THE DREYFUS/LAUREL FUNDS, INC.
/s/Marie E. Connolly*
Marie E. Connolly*
President
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Amendment to the Registration Statement has been signed below
by the following persons in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/Marie E. Connolly*
_______________________ President, Treasurer 06/25/96
Marie E. Connolly
/s/Francis P. Brennan*
_______________________ Director,
Francis P. Brennan Chairman of the Board 06/25/96
/s/Ruth Marie Adams*
_______________________ Director 06/25/96
Ruth Marie Adams
/s/Joseph S. DiMartino*
_______________________ Director 06/25/96
Joseph S. DiMartino
/s/James M. Fitzgibbons*
________________________ Director 06/25/96
James M. Fitzgibbons
/s/Kenneth A. Himmel*
________________________ Director 06/25/96
Kenneth A. Himmel
/s/Stephen J. Lockwood*
________________________ Director 06/25/96
Stephen J. Lockwood
/s/Roslyn M. Watson*
________________________ Director 06/25/96
Roslyn M. Watson
/s/J. Tomlinson Fort*
________________________ Director 06/25/96
J. Tomlinson Fort
/s/Arthur L. Goeschel*
________________________ Director 06/25/96
Arthur L. Goeschel
/s/Arch S. Jeffery*
________________________ Director 06/25/96
Arch S. Jeffery
/s/Robert D. McBride*
________________________ Director 06/25/96
Robert D. McBride
/s/John J. Sciullo*
________________________ Director 06/25/96
John J. Sciullo
*By:
______________________
Eric B. Fischman,
Attorney-in-Fact
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